BNY Mellon has been fined $5m by the CFTC for failing to accurately report millions of swap transactions and inadequately supervising its swap dealer operations.
This action stems from BNYM’s non-compliance with a previous CFTC order and various mandates under the Commodity Exchange Act (CEA) and CFTC regulations.
The CFTC’s findings revealed that from 2018 to 2023, BNYM misreported at least five million swap transactions, a violation compounded by its previous infraction dated September 30, 2019, which had already mandated the firm to cease such discrepancies.
This lapse in accurate reporting underscores a larger issue within BNYM’s oversight mechanisms, particularly concerning the monitoring of voice and e-communications among its associated persons (APs). The bank’s failure to implement a robust system for monitoring communications in languages other than English was specifically noted as a deficiency.
In response to these failures, BNYM has agreed to engage an independent compliance consultant to review and enhance its compliance procedures, aiming to prevent future misconduct. This decision reflects a broader commitment to remediation and cooperation with regulatory bodies, as highlighted by the Division of Enforcement.
Division of Enforcement Director Ian McGinley stressed the importance of precision in swap data reporting, stating, “Accurate reporting is a core pillar of the regulatory regime for swaps, and every individual data field matters.” He also commended BNYM for its “extensive cooperation, remediation, and decision to retain an independent compliance consultant.”
This order not only involves a significant financial penalty but also signifies ongoing regulatory scrutiny in the financial services industry, particularly concerning compliance practices and the integrity of financial reporting.
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