Citi and UBS Units Settle With CFTC Over Compliance Claims

Units of Citigroup Inc. and UBS AG were among several firms that agreed to pay a total of $8.3 million to settle U.S. Commodity Futures Trading Commission claims over compliance-related violations including recordkeeping and reporting lapses, the derivatives regulator said.

The penalties were part of the “enforcement sprint” initiative that CFTC Acting Chairman Caroline Pham debuted in March to encourage businesses under scrutiny from the agency to come up with reasonable offers to quickly settle cases that didn’t involve market abuse or customer harm.

“The goal of this initiative was to provide firms an opportunity to work with DOE to fairly and efficiently resolve compliance-related investigations,” Pham said Thursday in a statement, referring to the agency’s division of enforcement. “This initiative did just that, and positions DOE staff to refocus on fighting fraud and helping victims.”

UBS and two of its arms agreed to pay the biggest penalty — $5 million — for allegedly failing to properly supervise trade surveillance programs from at least 2015 to 2024, the CFTC said. A spokesperson for UBS said the company is pleased to have resolved the matter.

Citigroup Global Markets, a registered futures commission merchant and swap dealer, will pay $1.5 million to settle claims it failed to file accurate large trader reports from at least 2015 to the fall of 2022 and failed to maintain regulatory records for 10 weeks in 2023.

“As recognized by the CFTC, Citi self-reported the issues, provided exemplary cooperation to the CFTC, and strengthened our controls,” a Citi representative said.

Three settlements with SMBC Capital Markets Inc. and units of Banco Santander SA, and the Bank of New York Mellon involved the firms agreeing to pay $500,000 each to resolve recordkeeping and supervision violation allegations. The firms’ employees used unapproved communications channels, such as messaging apps, the CFTC said. The penalties reflect “exemplary” cooperation, the agency said.

“BNY takes its regulatory responsibilities seriously and is pleased to have resolved this matter,” BNY spokesperson Ryan Wells said in a statement. A spokesperson for Santander said the firm was pleased to have the matter fully resolved and it had made “considerable enhancements” to its policies and procedures. SMBC didn’t immediately respond to a request for comment.

US Bank, a registered swap dealer, will pay $325,000 for allegedly reporting inaccurate swap valuation data from at least 2022 to 2024, the CFTC said. The firm said the settlement related to self-reported data errors that had no customer impact and was “pleased to have this matter behind us.”

The firms neither admitted nor denied the CFTC’s claims. Each firm has completed or nearly completed remediation efforts, the agency said, and agreed to stop further violations of CFTC regulations.

Pham said on Thursday that when announcing the program in March she “expressed concerns about a ballooning enforcement docket for operational or technical non-compliance issues with no harm, with some matters languishing for nearly a decade, diverting resources away from the most critical aspects of DOE’s mission to protect against fraud, manipulation and abuse in our markets.”

To participate in the “enforcement sprint” initiative, firms had to act fast. Pham gave the public a two-week deadline to comply. The agency would try to resolve everything within 30 days, she said. Almost two dozen firms sought deals.

The CFTC has since shrunk to one remaining commissioner — Pham. Democrat Kristin Johnson left on Sept. 3.

Pham has announced she will leave for the private sector once a permanent CFTC chair gets installed. The process to confirm President Donald Trump’s pick to lead the regulator, Brian Quintenz, has been thwarted by last-minute delays, with votes to advance his nomination out of committee postponed twice.