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CFTC’s 2017 Enforcement Actions Secure $413 Million in Penalties

by Aziz Abdel-Qader
  • The report also highlights several initiatives by the CFTC focused on supporting its whistleblowers program.
CFTC’s 2017 Enforcement Actions Secure $413 Million in Penalties
Finance Magnates
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The Commodity Futures Trading Commission (CFTC) today announced its 2017 annual enforcement and compliance results, highlighted by a series of high-impact cases involving charges with manipulation, spoofing, and unlawful use of customer funds.[gptAdvertisement]

During CFTC’s 2017 fiscal year, which spanned October 1, 2016 to September 30, 2017, the agency’s enforcement actions secured US$413 million in restitution, disgorgement and penalties. Out of this figure, more than $265 million were handed over to the US Treasury department.

The report also highlights several initiatives by the CFTC’s Division of Enforcement focused on supporting its whistleblowers program. Whistleblowing has become a staple of multiple US regulatory regimes, namely those of the US Commodity Futures Trading Commission (CFTC) and the SEC. Both entities have deployed programs or rewards to individuals in a bid to help support or streamline investigations.

The CFTC said that it secured enforceable commitments through landmark settlements of several high-profile cases spanning the entire spectrum of the marketplace. Examples of misconduct included benchmark rate manipulation, spoofing and retail fraud involving cryptocurrencies.

The report highlights the two new initiatives announced in 2017 as key milestones. The first was the launch of the New York-based fintech facility, known as ‘LabCFTC’, which is aimed at helping technology firms navigate regulations, thus making it easier to align CFTC rules with today’s new technologies. The second milestone was granting Blockchain startups its official registration as a derivatives clearing organization (DCO), allowing the firms to both trade and clear Bitcoin options.

Manipulation, Attempted Manipulation, False Reporting, Disruptive Trading 12
Protection of Customer Funds, Supervision and Financial Integrity 6
Retail Fraud 20
Illegal Off-Exchange Contracts, Failure to Register 1
Other Trade Practice: Wash Trades, Fictitious Trades, Position Limits, Trading Ahead 3
Reporting, Recordkeeping 7
Total Number of Enforcement Actions Brought 49

Commenting on the findings, CFTC Chairman Christopher Giancarlo said: “By enforcing the law and punishing wrongdoing in our markets, the CFTC’s enforcement program is vital to the CFTC’s mission to protect from harm both customers and the integrity of the derivatives markets. The work of the enforcement program, as reflected both in the significance of the actions brought and in the innovation and enhancements implemented, sends a message to the public that the CFTC will continue to vigorously enforce our laws, and that the agency’s enforcement staff is well equipped to respond to the new challenges presented by our evolving markets.”

James McDonald, the CFTC’s Director of Enforcement, added: “The success of the CFTC’s enforcement program during the past year is a tribute to the support of enforcement matters by the Commission and also to the professionalism and hard work of its enforcement staff. The CFTC brought significant enforcement actions, and has also laid the ground work for future success. The integration of the market surveillance unit into the Division of Enforcement, the strengthening of our whistleblower protections, and the development of our cooperation program will open new avenues through which we can identify misconduct, hold wrongdoers accountable, and deter future violations of the law.”

The Commodity Futures Trading Commission (CFTC) today announced its 2017 annual enforcement and compliance results, highlighted by a series of high-impact cases involving charges with manipulation, spoofing, and unlawful use of customer funds.[gptAdvertisement]

During CFTC’s 2017 fiscal year, which spanned October 1, 2016 to September 30, 2017, the agency’s enforcement actions secured US$413 million in restitution, disgorgement and penalties. Out of this figure, more than $265 million were handed over to the US Treasury department.

The report also highlights several initiatives by the CFTC’s Division of Enforcement focused on supporting its whistleblowers program. Whistleblowing has become a staple of multiple US regulatory regimes, namely those of the US Commodity Futures Trading Commission (CFTC) and the SEC. Both entities have deployed programs or rewards to individuals in a bid to help support or streamline investigations.

The CFTC said that it secured enforceable commitments through landmark settlements of several high-profile cases spanning the entire spectrum of the marketplace. Examples of misconduct included benchmark rate manipulation, spoofing and retail fraud involving cryptocurrencies.

The report highlights the two new initiatives announced in 2017 as key milestones. The first was the launch of the New York-based fintech facility, known as ‘LabCFTC’, which is aimed at helping technology firms navigate regulations, thus making it easier to align CFTC rules with today’s new technologies. The second milestone was granting Blockchain startups its official registration as a derivatives clearing organization (DCO), allowing the firms to both trade and clear Bitcoin options.

Manipulation, Attempted Manipulation, False Reporting, Disruptive Trading 12
Protection of Customer Funds, Supervision and Financial Integrity 6
Retail Fraud 20
Illegal Off-Exchange Contracts, Failure to Register 1
Other Trade Practice: Wash Trades, Fictitious Trades, Position Limits, Trading Ahead 3
Reporting, Recordkeeping 7
Total Number of Enforcement Actions Brought 49

Commenting on the findings, CFTC Chairman Christopher Giancarlo said: “By enforcing the law and punishing wrongdoing in our markets, the CFTC’s enforcement program is vital to the CFTC’s mission to protect from harm both customers and the integrity of the derivatives markets. The work of the enforcement program, as reflected both in the significance of the actions brought and in the innovation and enhancements implemented, sends a message to the public that the CFTC will continue to vigorously enforce our laws, and that the agency’s enforcement staff is well equipped to respond to the new challenges presented by our evolving markets.”

James McDonald, the CFTC’s Director of Enforcement, added: “The success of the CFTC’s enforcement program during the past year is a tribute to the support of enforcement matters by the Commission and also to the professionalism and hard work of its enforcement staff. The CFTC brought significant enforcement actions, and has also laid the ground work for future success. The integration of the market surveillance unit into the Division of Enforcement, the strengthening of our whistleblower protections, and the development of our cooperation program will open new avenues through which we can identify misconduct, hold wrongdoers accountable, and deter future violations of the law.”

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