Washington, D.C. – On September 27, 2021, the Commodity Futures Trading Commission (CFTC) filed and settled charges against Citibank, N.A. and Citigroup Global Markets Limited (collectively, Citi) for repeated failures to comply with Legal Entity Identifier (LEI) reporting requirements and related supervisory shortcomings. The charges stem from violations of a 2017 CFTC order addressing similar reporting and supervisory failures.
The CFTC order imposes a $1 million civil monetary penalty on Citi, a sum reduced in recognition of the company’s cooperation with the investigation and proactive efforts to correct the issues. In addition to the penalty, the order mandates that Citi cease and desist from further violations of the Commodity Exchange Act and CFTC regulations. Citi is also required to provide corrected swap data to swap data repositories (SDRs) and update the CFTC on its remediation progress.
“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. “Accurate swap data reporting is essential to fulfillment of the CFTC’s regulatory mandates, including monitoring systemic risk and preventing market abuse.”
The current action builds on a 2017 CFTC order that found Citi failed to accurately report LEI data, lacked the necessary electronic systems and procedures, failed to correct existing errors, and failed to adequately supervise LEI reporting. The 2017 order included a $550,000 penalty and a cease and desist requirement.
The latest findings reveal that, following the 2017 order, Citi continued to misreport LEIs for swap transactions between 2013 and November 2019. The misreporting involved using “Name Withheld” as the counterparty identifier instead of a valid LEI or a Privacy Law Identifier, as permitted by CFTC no-action relief. The failures were attributed to inadequate supervision of a third-party reporting service provider and delays – exceeding 18 months – in upgrading internal systems.
Furthermore, the order found that Citi failed to satisfy backloading conditions for CFTC no-action relief, failing to submit LEIs for live and expired trades to SDRs within the required timeframe. These continued failures were again linked to insufficient supervision of swap dealer activities related to LEI reporting.
Source: CFTC.gov
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