Washington, D.C. – Citibank, N.A. and Citigroup Global Markets Limited (collectively, Citi) have been penalized $1 million by the Commodity Futures Trading Commission (CFTC) for repeated failures to accurately report Legal Entity Identifier (LEI) information to swap data repositories (SDRs) and for supervisory lapses, the agency announced Tuesday.
The CFTC’s order details violations of a 2017 cease and desist order, which stemmed from previous failures in LEI reporting and supervisory procedures. According to the agency, Citi failed to properly report LEIs for swap transactions between 2013 and November 2019, often using “Name Withheld” instead of a valid LEI or a Privacy Law Identifier as permitted by CFTC guidance.
Investigators found these errors were caused by insufficient oversight of a third-party reporting service provider and a delayed implementation of necessary internal system upgrades – taking over 18 months to complete. Furthermore, Citi failed to “backload” previously missing LEI data, missing deadlines to submit corrections for both active and terminated trades. The agency states that until at least September 2020, Citi hadn’t satisfied requirements to retroactively submit the required data.
“As this case demonstrates, the CFTC will vigorously pursue swap dealer registrants that fail to meet their reporting obligations and violate CFTC orders,” said Acting Director of Enforcement Vincent McGonagle in a statement. “Accurate swap data reporting is essential to fulfillment of the CFTC’s regulatory mandates, including monitoring systemic risk and preventing market abuse.”
The $1 million penalty was reduced to acknowledge Citi’s cooperation with the investigation and its proactive efforts to remediate the issues. As part of the settlement, Citi is required to cease further violations of the Commodity Exchange Act and CFTC regulations, and to provide corrected swap data to SDRs. The company must also update the CFTC on its ongoing remediation efforts.
The 2017 order initially penalized Citi $550,000 for similar reporting and supervisory failures, establishing the foundation for this latest enforcement action.
Source: CFTC.gov
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