WASHINGTON D.C. – November 8, 2018 – Global banking giant Commerzbank AG has been slapped with a $12 million penalty by the Commodity Futures Trading Commission (CFTC) for failing to adequately supervise its swap dealer activities and for misleading statements made to regulators. The CFTC issued an order simultaneously filing and settling charges against the Frankfurt, Germany-based firm, alleging violations of the Commodity Exchange Act (CEA) and CFTC Regulations spanning over five years.
The order details a systemic failure by Commerzbank management to oversee its swap dealer operations beginning December 31, 2012, and continuing through at least 2018. This lack of supervision, according to the CFTC, directly resulted in thousands of violations of various regulations. Specifically, Commerzbank failed to properly determine if swap transactions with non-U.S. counterparties were subject to the Dodd-Frank Act, failed to report transactions to swap data repositories, and failed to submit accurate Large Trader Reports.
Furthermore, the CFTC found that Commerzbank did not execute certain swaps on designated swap execution facilities as required by law. The company also allegedly made misleading statements and material omissions in its annual Chief Compliance Officer reports to the CFTC in 2014 and 2015, failing to disclose deficiencies in its compliance systems.
As part of the settlement, Commerzbank is required to pay the $12 million civil monetary penalty. The bank must also retain an outside consultant for two years to review its swap dealer compliance and submit annual reports to the CFTC detailing its compliance efforts. This case underscores the importance of transparency and robust supervision within the financial industry, according to CFTC officials.
“This case highlights the importance of complete and accurate reporting of swap transactions, supervision, and transparency with the CFTC,” stated James McDonald, CFTC Director of Enforcement. “The Commission will work vigorously to ensure the integrity of our markets by ensuring registrants comply with their reporting, compliance, and supervision obligations.”
CFTC Chairman J. Christopher Giancarlo emphasized the close working relationship between the CFTC and BaFin, Germany’s financial regulatory authority, stating he looks forward to continued collaboration.
Source: CFTC.gov
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