Washington, D.C. – The Commodity Futures Trading Commission (CFTC) today announced settlements with affiliates of four financial institutions for failing to comply with recordkeeping and supervision regulations. The firms admitted to lapses in maintaining and preserving required records, and in adequately supervising employee communications.
The CFTC orders detail that for several years, the institutions allowed employees, including those in senior positions, to utilize unapproved communication methods – such as personal text messages and WhatsApp – for business-related discussions. These communications often concerned the firms’ commodities and swaps businesses and were not properly archived or readily available for CFTC review.
The violations stem from the firms’ inability to prevent the use of these unapproved channels, despite internal policies explicitly prohibiting such practices. In some instances, supervisory personnel themselves engaged in business communications through these non-compliant methods, further demonstrating a failure of oversight.
According to the CFTC, this failure to maintain records and supervise communications resulted in the loss of potentially thousands of business-related messages. The agency argues this constitutes a violation of both recordkeeping and diligent supervision provisions. The firms are ordered to cease and desist from further violations and undertake specified remedial actions to improve compliance.
“With today’s actions, the CFTC has now brought enforcement actions against 18 financial institutions, and imposed over $1 billion in penalties, for violations of the CFTC’s recordkeeping and supervision requirements involving the use of unapproved communication methods,” stated Ian McGinley, Director of Enforcement. “The Commission’s message could not be more clear—recordkeeping and supervision requirements are fundamental, and registrants that fail to comply with these core regulatory obligations do so at their own peril.”
The SEC also announced parallel enforcement actions and penalties against several of the same financial institutions today. Since December 2021, the CFTC has levied a total of $1.091 billion in civil monetary penalties against 18 financial institutions for similar recordkeeping and supervision failures.
Source: CFTC.gov
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