JPMorgan Chase, Bank of America, and Goldman Sachs Fined $53 Million for Inadequate Reporting of Derivatives Transactions

Three Major US Banks Face CFTC Penalties for Inadequate Reporting of Swap Market Transactions

JPMorgan Chase, Bank of America, and Goldman Sachs Ordered to Pay Fines by CFTC

The Commodity Futures Trading Commission (CFTC) has imposed fines on JPMorgan Chase, Bank of America, and Goldman Sachs in the amounts of $15 million, $8 million, and $30 million, respectively.

Goldman Sachs faced penalties for what the CFTC deemed "unprecedented failures" in swap data reporting and the disclosure of Pre-Trade Mid-Market Marks (PTMMMs). These marks are required by the Dodd-Frank Act of 2010 to enable counterparties to make informed decisions when entering swaps. The CFTC alleged that Goldman Sachs violated this regulation over a million times since it came into effect more than 13 years ago. While the bank has backreported over 20 million swaps to date, the CFTC believes that this number significantly underestimates the true extent of the reporting failures.

JPMorgan's penalty resulted from its failure to report data relevant to foreign exchange (FX) swaps. The bank did not report over 150,000 constituent FX spot transactions and incorrectly classified certain transactions, leaving them unreported.

Bank of America's violation involved almost four million swap transactions that were either not reported or reported incorrectly to data repositories. These reporting failures were attributed to 25 types of errors, mainly related to swap allocations, where an agent allocates a portion of an executed swap to clients who are the actual counterparties to the original transaction.

Furthermore, the CFTC noted that Bank of America did not provide adequate supervision from approximately 2015 to ensure compliance with their swap dealer data activity and reporting obligations under the CEA and CFTC regulations.

While Bank of America and JPMorgan admitted to the allegations as part of their settlements, Goldman Sachs did not concede to the charges.

Oct 09, 2023

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