Washington, D.C. – The Commodity Futures Trading Commission (CFTC) has levied a $5 million penalty against The Bank of New York Mellon (BNYM) for repeated failures to accurately report swap transactions and for inadequate supervision of its swap dealer business. The settlement, finalized through a CFTC order issued August 26, 2024, addresses violations of a prior 2019 CFTC order and breaches of the Commodity Exchange Act (CEA) and related regulations.
According to the CFTC, from approximately 2018 through 2023, BNYM incorrectly reported at least five million swap transactions to registered swap data repositories. This constitutes a repeat offense, violating the terms of a previous consent order issued by the CFTC in September 2019 (CFTC No. 19-42). The 2019 order mandated BNYM to cease and desist from similar violations.
The investigation also revealed deficiencies in BNYM’s supervisory controls. Specifically, the bank lacked written policies and procedures for monitoring the voice and electronic communications of its associated persons (APs), particularly those communicating in languages other than English. This oversight hindered the bank’s ability to ensure compliance with the CEA and CFTC regulations.
“Accurate reporting is a core pillar of the regulatory regime for swaps, and every individual data field matters,” stated Ian McGinley, Director of the Division of Enforcement. “It is essential that swap dealers get this right.”
The CFTC acknowledged BNYM’s self-reporting of the violations, its remediation efforts, including the engagement of an independent compliance consultant, and its substantial cooperation during the investigation, resulting in a reduced civil monetary penalty. As part of the settlement, BNYM has agreed to retain the independent consultant to review and advise on its compliance program, aiming to prevent future misconduct.
The case was led by CFTC staff members Daniel Jordan and Rick Glaser, with contributions from former staff Amanda Burks and Phillip Tumminio.
Source: CFTC.gov
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