Washington, D.C. – Mizuho Capital Markets LLC has been slapped with a $1.5 million penalty by the Commodity Futures Trading Commission (CFTC) for widespread compliance failures related to swap dealer requirements. The CFTC alleges the firm failed to properly reconcile swap portfolios, provide required disclosures to counterparties, and accurately report swap transactions to a swap data repository (SDR).
The order, finalized on Monday, details violations spanning from approximately 2013 to April 2021. Mizuho Capital allegedly neglected to establish adequate written policies and procedures for portfolio reconciliation with non-swap dealer counterparties, resulting in a failure to reconcile portfolios—or provide necessary information—for over six years.
Furthermore, the CFTC found repeated instances where Mizuho Capital failed to disclose daily marks and the methodologies behind them to a significant number of counterparties, violating disclosure requirements. Errors and omissions in swap data reporting to an SDR affected at least 100,000 swaps, according to the agency.
The penalty was substantially reduced due to Mizuho Capital’s self-reporting of the violations, its cooperation with the CFTC’s investigation, and its subsequent remediation efforts. The firm is now mandated to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations, and to continue updating the CFTC on its progress toward full compliance.
“As demonstrated by today’s action, the CFTC will work vigorously to ensure the fairness and integrity of our markets by holding swap dealer registrants who fail to meet their compliance, regulatory and supervisory obligations accountable for their failures,” stated Acting Director of Enforcement Vincent McGonagle.
The National Futures Association assisted the CFTC in the investigation. Staff members from both the CFTC’s Market Participants Division and Division of Enforcement contributed to the case.
Source: CFTC.gov
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