A pair of affiliated swap dealers settled CFTC charges for Legal Entity Identifier ("LEI") reporting failures and related supervisory matters (see previous coverage here).
According to the Order, the CFTC found that the swap dealers misreported LEIs due to the inadequate communication of masking requirements between the swap dealers and the Reporting Service Provider. The CFTC explained that the swap dealers relied on LEI reporting no-action relief under CFTC Letter 17-16, but failed to satisfy the conditions of the relief.
To settle the charges, the swap dealer agreed to (i) cease and desist from future violations, (ii) pay a $1 million civil money penalty and (iii) various undertakings, including providing its swap data repository with corrected swap data. The CFTC recognized the dealers' "substantial cooperation" during the investigation and concerning remediation efforts.
Primary Sources
- CFTC Order: Citibank, N.A. and Citigroup Global Markets Limited
- CFTC Press Release: CFTC Orders Citibank and Citigroup Global Markets Limited to Pay a $1 Million Penalty for Swap Data Reporting Violations, Related Supervision Failures, and Violation of a Prior CFTC Order
As a result, the CFTC determined that the dealers violated Sections 2(a)(13)(G) ("Reporting of Swaps to Registered Swap Data Repositories"), 4r(a)(3) ("Reporting Obligations") and 4s(h)(1)(B) of the Exchange Act, and CFTC Rules 23.602(a) ("Supervision"), 45.3 ("Swap Data Reporting: Creation Data"), 45.4 ("Swap Data Reporting: Continuation Data") and 45.6 ("Legal Entity Identifiers").
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