The CFTC cracks the regulatory whip
From January 1, 2020 to date, the CFTC has dished out 113 regulatory actions. Chairman and CEO Heath Tarbert is proud of this and elaborates on the CFTC’s results in censuring firms and individuals, large and small, which seek to transgress
US futures and options regulators have been busy in 2020 recently published data shows the Commodity Futures Trading Commission (CFTC)’s enforcement division has posted a new record number of enforcement actions across the course of 2020 to date.
The 113 actions made by the division racked up $1.30 billion in fines and penalties, a figure that was boosted by the largest fine in CFTC history, which backed up the promises of robust regulation from the CFTC, under the stewardship of Chairman and CEO Heath Tarbert
The previous record for the number of annual enforcement actions was 102, whilst the CFTC’s annual 30-year average is way down at just 58 cases.
Speaking about the record number of enforcement actions Mr Tarbet said
“A strong enforcement program at the CFTC is critical to the proper functioning of our derivatives markets and the health of the American economy overall,”
and that
“Without integrity, these markets, markets that inform the price of everything from food to gasoline to interest rates on home mortgages—simply would not work”
Mr Tarbet’s enforcement team have caught some high profile names in their net during 2020. Deutsche Bank agreed to pay $10 million back in June to settle actions around alleged spoofing and breaking data disclosure requirements, whilst Citigroup is set to pay a penalty of $4.5 million, after millions of voice recordings of traders and other audio files were deleted, even though some of the data had previously been subpoenaed by the derivatives watchdog.
Nearly half of the cases pursued by the CFTC enforcement division involved retail fraud, and 24 cases centred on the protection of customer funds with regard to their supervision and integrity.
Whilst there were 16 cases of manipulative conduct or spoofing, the CFTC data showed that 50 out of the total 113 counts involved charges against one or more individuals.
Actions against market manipulators raised $920 million in penalties and disgorgement of profits, and 2020 saw two of the largest cases of their kind in the CFTCs history.
The enforcement division worked with other agencies including Federal and State authorities in both civil and criminal capacities.
2020 was also a good year for whistleblowers to the CFTC, which authorised the payment of $20 million of rewards to those who highlighted rule-breaking and illegal behaviour.
The CFTC recently published a much-awaited report into the negative pricing of WTI crude oil futures, seen in the spring. The report was comprehensive at 37 pages long but it stopped short of naming names, or explaining exactly how and why prices for the expiring crude oil contract plunged below zero.
Mr Tarbet said at the publication of the report that a definitive analysis of the causes was not available at this time, but he wouldn’t be drawn on whether one would ultimately be forthcoming.