Three Major US Banks Fined for Failure to Report Swaps Transactions
The Commodity Futures Trading Commission (CFTC) has imposed fines on JPMorgan Chase, Bank of America, and Goldman Sachs for their failure to accurately report millions of transactions in the swaps market. The fines amount to $15 million, $8 million, and $30 million respectively. Goldman Sachs was penalized for its “unprecedented failures” in swap data reporting and disclosures of Pre-Trade Mid-Market Marks (PTMMMs). The CFTC requires swap dealers like Goldman Sachs to provide PTMMMs to enable counterparties to make informed decisions when entering swaps. The violations by Goldman Sachs alone have exceeded one million instances since 2010.
JPMorgan Chase and Bank of America Violations
JPMorgan Chase failed to report relevant data regarding foreign exchange (FX) swaps, including over 150,000 constituent FX spot transactions. The bank also misclassified certain transactions, resulting in them being left unreported. Bank of America, on the other hand, failed to report or correctly report nearly four million swap transactions to data repositories. These reporting failures were caused by various errors related to swap allocations. Additionally, Bank of America did not provide adequate supervision from 2015 onwards to ensure compliance with swap dealer data activity and reporting obligations.
Goldman Sachs Denies Allegations
JPMorgan Chase and Bank of America admitted the allegations as part of their settlements, while Goldman Sachs denies any wrongdoing. Despite backreporting over 20 million swaps, the CFTC believes that the figure significantly underestimates the extent of Goldman Sachs’ swap data reporting failures. Furthermore, the bank provided inaccurate or incomplete PTMMMs on over a million occasions since 2013.
Hot Take: Penalties for Failing to Report Swaps Transactions
Three major US banks, JPMorgan Chase, Bank of America, and Goldman Sachs, have been hit with substantial fines by the CFTC for their failure to properly report millions of transactions in the swaps market. These penalties highlight the importance of accurate reporting and compliance with regulations in the financial industry. Failure to provide essential data can hinder counterparties’ ability to make informed decisions and compromises market transparency. The CFTC’s enforcement actions serve as a reminder to financial institutions to prioritize accurate reporting and adhere to regulatory requirements.
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