Deutsche Bank agrees to pay $9m to settle CFTC charges for swap data reporting violations
The charges stemmed from a swap reporting platform outage at Deutsche Bank beginning on April 16, 2016, during which the bank was unable to report any swap data for multiple asset classes for a five-day period.
Less than a month after the United States Commodity Futures Trading Commission (CFTC) and Deutsche Bank informed the New York Southern District Court that they were still working on a settlement of a case brought against the bank back in 2016, the parties have filed a proposed consent order that may bring the case to a conclusion.
Under the proposed consent order, submitted at the Court on June 12, 2020, pursuant to Section 6c(d) of the Act, 7 U.S.C. § 13a-1(d) (2018), Deutsche Bank shall pay a civil monetary penalty in the amount of $9 million.
In addition, Deutsche Bank will have to comply with an earlier order issued by the Commission by correctly reporting its cancelled trades, correcting errors and omissions in previously reported swap data, and appropriately supervising its swap data processes.
Deutsche Bank is permanently restrained and enjoined from violating rules and regulations by failing to comply with the swap data reporting requirements; by failing to report swap data with valid legal entity identifiers; by failing to correct errors and omissions in previously reported swap data; by failing to supervise its swap data reporting processes; and by failing to have an adequate business continuity disaster recovery plan.
The case was launched in August 2016. The CFTC charged Deutsche Bank AG with failing to report any swap data for multiple asset classes for five days; submitting incomplete and untimely swap data; failing to supervise its employees responsible for swap data reporting; having an inadequate Business Continuity and Disaster Recovery Plan; and violating a prior CFTC Order.
As alleged in the CFTC’s Complaint, on April 16, 2016, Deutsche Bank’s swap data reporting system experienced a Systems Outage that prevented Deutsche Bank from reporting any swap data for multiple asset classes for approximately five days. Deutsche Bank’s subsequent efforts to end the System Outage repeatedly exacerbated existing reporting problems and often led to the discovery or creation of new reporting problems, many of which violate a CFTC Order entered in September 2015.
For instance, the Complaint alleges that Deutsche Bank’s swap data reported before and after the System Outage revealed persistent problems with the integrity of certain data fields, including numerous invalid legal entity identifiers (LEIs). The Complaint also alleges that the System Outage and the subsequent reporting problems transpired at least in part because Deutsche Bank failed to have an adequate Business Continuity and Disaster Recovery Plan and other appropriate supervisory systems in place.
