Washington, D.C. – The Commodity Futures Trading Commission (CFTC) announced enforcement actions on Monday, September 30, 2019, against six financial institutions for failures related to swap data reporting and, in one case, risk management. The institutions penalized include HSBC Bank USA, N.A., Société Générale International Limited, The Northern Trust Company, NatWest Markets Plc, The Bank of New York Mellon, and PNC Bank, National Association.
Société Générale International Limited and The Northern Trust Company faced additional charges for supervisory failures connected to the reporting lapses. Notably, HSBC Bank USA, N.A. was charged with violating swap-dealer risk management regulations – a first for the CFTC. CFTC Director of Enforcement, James McDonald, emphasized the importance of accurate reporting for effective regulatory oversight and enforcement.
The CFTC’s order against HSBC Bank USA, N.A. found that from January 2013 to November 2015, the bank failed to establish adequate risk management systems for its swap activities and failed to properly report swap data to a swap data repository. Specifically, HSBC did not designate a governing body or senior management to fulfill oversight duties as required by CFTC regulations. As a result of these violations, HSBC will pay a $650,000 civil monetary penalty, which was reduced in consideration of the bank’s cooperation and remediation efforts.
Société Générale International Limited was charged with failing to comply with swap data reporting obligations, failing to implement required policies and procedures, and related supervisory failures. The CFTC found the reporting failures at Société Générale International to be widespread and systemic, affecting all asset classes and reporting obligations. Details of penalties for Société Générale and the other institutions – The Northern Trust Company, NatWest Markets Plc, The Bank of New York Mellon, and PNC Bank, National Association – were not immediately available in the released statement.
The CFTC’s action against HSBC marks the first time the agency has pursued charges related to these specific swap-dealer risk management regulations. McDonald stated the commission will continue to prioritize enforcement of these critical requirements designed to monitor and regulate systemic risk within the swaps market.
The case was assisted by Pamela M. Geraghty of the Division of Swap Dealer and Intermediary Oversight and Meghan Tente of the Division of Market Oversight. Michael Geiser, Peter Janowski, Candice Aloisi, Lenel Hickson, Jr., and Manal M. Sultan of the Division of Enforcement staff were also involved in the investigation.
Source: CFTC.gov
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