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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