The US Commodity Futures Trading Commission (CFTC) has filed and simultaneously settled charges against Wells Fargo Bank for failing to comply with its obligations to submit accurate large trader reports (LTRs) for physical commodity swap positions.
Wells Fargo has its main office in Sioux Falls, South Dakota, and has been provisionally registered with the CFTC as a swap dealer since 31 December 2012.
The CFTC order requires, among other things, that Wells Fargo pay a USD400,000 civil monetary penalty and cease and desist from committing further violations of the CEA and CFTC regulations, as charged.
As provided in the order, large trader reporting for physical commodity swaps is essential to the CFTC’s ability to conduct effective surveillance of markets in US physical commodity futures and economically equivalent swaps.
The order makes clear that as of 1 March 2013, swap dealers required to submit LTRs are expected to be in full compliance with the requirements governing LTRs set forth in CFTC Regulations 20.4 and 20.7, in conjunction with further instructions provided in the Part 20 Guidebook issued by the CFTC’s division of market oversight.
The order finds that from at least 1 March 2013 to 13 November 2015, every LTR submitted by Wells Fargo failed to meet Part 20 requirements. According to the order, Wells Fargo submitted inaccurate LTRs that contained multiple errors, including both missing data and data presented in a format inconsistent with CFTC requirements. Among the errors described in the order, Wells Fargo’s reports included, at various times, records that failed to use the correct Clearing Member Identifier and improperly formatted swaption expiration date values.
The order further states that upon receiving its first error message from the CFTC in July 2015, Wells Fargo analysed its past reports and made and continues to make modifications to its data processing and reporting systems as necessary to comply with its LTR reporting requirements.
