United States:
Swap Dealer Settles CFTC Portfolio Reconciliation, Daily Mark And Reporting Charges
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A swap dealer (“SD”) settled CFTC charges relating to compliance
with CFTC requirements on portfolio reconciliation, mid-market
marks and trade reporting.
According to the Order, the firm failed to engage in portfolio
reconciliations with non-SD counterparties and disclose daily marks
(along with the methodology and assumptions to prepare them), and
made errors and omissions in reporting data to a swap data
repository.
As a result of its findings, the CFTC determined that the SD
violated, among other things, CFTC Rule 23.431 (“Disclosures of material
information”), Rule 23.502 (“Portfolio
reconciliation”) and Rule 23.602 (“Diligent
supervision”), as well as various provisions in Parts 43 and
45 of the CFTC regulations.
To settle the charges, the swap dealer agreed to (i) cease and
desist from future violations, (ii) a $1.5 million civil money
penalty and (iii) compliance undertakings. The CFTC stated that the
swap dealer’s self-reporting, cooperation and remediation
efforts surrounding the CFTC’s investigation resulted in a
significant reduction in the swap dealer’s penalty amount.
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