A pair of affiliated swap brokers settled the CFTC’s fees for Legal Entity Identifier (“LEI”) reporting failures and related supervisory issues (see previous coverage here).

According to the Ordinance, the CFTC found that swap traders misreported LEIs due to inadequate communication of masking requirements between swap traders and the reporting service provider. The CFTC explained that swap brokers relied on the LEI declaring inaction relief under CFTC Letter 17-16, but did not meet the terms of the relief.

To settle the fees, the swap broker agreed to (i) cease and desist from any future breaches, (ii) pay a civil fine of $ 1 million, and (iii) various covenants including providing corrected swap data to its swap data repository. The CFTC acknowledged the “substantial cooperation” of the dealers during the investigation and regarding remediation efforts.

Primary sources

1. CFTC order: Citibank, NA and Citigroup Global Markets Limited
2. CFTC Press Release: CFTC Orders Citibank and Citigroup Global Markets Limited to Pay $ 1 Million Fine for Swap Data Reporting Violations, Associated Supervisory Failures, and Violation of a CFTC Order previous

As a result, the CFTC determined that the resellers had violated Sections 2 (a) (13) (G) (“Reporting Swaps to Registered Swap Data Repositories”), 4r (a) (3) (“Obligations to declaration ”) and 4s (h) (1) (B) of the Exchange Act, and CFTC rules 23.602 (a) (“ Supervision ”), 45.3 (“ Swap Data Reporting: Creation Data ”), 45.4 (“ Swap Data Reporting: Continuation Data “) and 45.6 (” Legal entity identifiers “).

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