CFTC Hits Citi with $1 Million Fine Over Swap Reporting Violations

Two Citigroup subsidiaries have been slapped with a $1 million fine by the US derivatives regulator to resolve federal court charges for alleged violations of swap data reporting.

The Commodity Futures Trading Commission (CFTC) ordered the penalty after finding Citibank NA and its international broker-dealer affiliate Citigroup Global Markets Ltd. had inaccurately reported swap data.

The alleged improper conduct came even as Citigroup was fined $550,000 in 2017 to resolve the agency’s claims that it failed to report key identifying data for tens of thousands of swaps. The failures entirely centered on collecting and reporting legal entity identifiers (“LEI”) for certain Citi swap counterparties.

As part of its previous settlement deal, Citi agreed to enhance existing procedures for swap data reporting in order to cease and desist violating CFTC regulations. However, the regulator found that two years after settling the previous charges, Citi did not report LEIs for numerous swaps between 2013 to November 2019.

As a result of design flaws in its data reporting systems, Citi consistently failed to correct errors in its data reporting and did not re-report trades in a timely manner as requested by the CFTC regulation and outside of the regulators’ time parameters.

In addition, the CFTC alleged that Citi failed to supervise its swap data reporting practices and procedures, which reflects “a reduction in recognition of Citi’s substantial cooperation with the Division of Enforcement’s investigation and proactive remediation.”

“As this case demonstrates, the CFTC will vigorously pursue swap dealer registrants that fail to meet their reporting obligations and violate CFTC orders. Accurate swap data reporting is essential to fulfillment of the CFTC’s regulatory mandates, including monitoring systemic risk and preventing market abuse,” said Acting Director of Enforcement Vincent McGonagle.

Today’s order also requires Citi to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations. Given the extent of the failures, the CFTC requested, and Citigroup consented to, mandate its compliance with certain undertakings to provide its SDR corrected swap data and to update the regulator on its remediation efforts.