Washington, D.C. – David McDermott, a senior executive at Bank of America, is facing penalties following a Commodity Futures Trading Commission (CFTC) investigation into recordkeeping failures at multiple financial institutions. The CFTC issued orders on September 27, 2022, simultaneously filing and settling charges against swap dealer and futures commission merchant (FCM) affiliates of eleven institutions, including Bank of America, for violations of recordkeeping and supervision requirements.
The CFTC found that Bank of America, under McDermott’s oversight, failed to maintain and preserve written communications – specifically those sent via unapproved methods such as personal text messages, WhatsApp, and Signal – that were required to be kept under CFTC regulations. These communications related directly to the firm’s business as a CFTC registrant, and the firm was unable to provide them to the CFTC when requested during examinations and investigations.
The investigation revealed years of widespread use of these unapproved communication methods by employees, including those in senior positions. Internal policies at Bank of America generally prohibited business-related communication via unapproved channels, yet supervisory personnel were also found to be in violation of these policies.
The CFTC’s findings indicate that the Division of Enforcement discovered these practices during investigations into trading activity at the institution. Following a review, Bank of America acknowledged to CFTC staff the widespread and longstanding use of unapproved communication methods by its employees. McDermott, as a key figure within the organization, bears responsibility for the failure to enforce compliance.
While the exact penalty amount for Bank of America has not been disclosed separately, the firm, along with the other settling registrants, is ordered to cease and desist from further violations, and to engage in specified remedial undertakings. CFTC Chairman Rostin Behnam emphasized that the Commission will “vigorously pursue registrants who fail to comply with their core regulatory obligations and hold them accountable.”
Acting Director of Enforcement Gretchen Lowe added that recordkeeping requirements are “key to the Commission’s oversight,” and that a registrant’s disregard for these obligations “threatens the Commission’s ability to effectively and efficiently conduct examinations and investigations.”
Source: CFTC.gov
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