The U.S. Commodity Futures Trading Commission (CFTC) today simultaneously filed and settled charges against JPMorgan Ventures Energy Corp. (JPMVE) and JPMorgan Chase Bank, N.A. (JPMCB) for failing to comply with their obligations to submit accurate large trader reports (LTRs) for physical commodity swap positions, in violation of the Commodity Exchange Act (CEA).
The CFTC order requires that JPMorgan pays a $225,000 civil monetary penalty and ceases committing further violations of the CEA and CFTC regulations.
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Large trader reporting for physical commodity swaps is essential to the CFTC’s ability to conduct effective surveillance of markets in U.S. physical commodity futures and economically equivalent swaps. The order states that from March 2013, swap dealers who are required to submit LTRs are expected to fully comply with their governing requirements in conjunction with further instructions laid out by the CFTC.
The order found that from the period between March 1, 2013 and April 30, 2014, JPMorgan filed LTRs that routinely contained errors. These included (1) reporting the underlying commodity, futures equivalent months, and currency value strike price in the wrong data fields; (2) reporting futures contract equivalents, commodity units, and notional values that were incorrect or missing; (3) providing identifying information for principals that attributed positions to the wrong entities; and (4) incorrectly reporting counterparty names. JPMorgan also failed to submit LTRs on two days.
JPMorgan has since made modifications to its data processing and reporting systems to comply with their LTR reporting requirements, correcting errors as they were identified, and have submitted corrected historical LTRs.