BNY Mellon Fined $5 Million by CFTC for Significant Swap Dealer Reporting Failures

BNY Mellon, now known simply as BNY, has agreed to pay a $5 million fine to the Commodity Futures Trading Commission (CFTC) due to "significant reporting failures" related to its swap dealer business. This penalty comes after the CFTC found that from 2018 to 2023, BNY repeatedly failed to correctly report the associated persons connected to five million swap transactions to a registered swap dealer repository.

According to the CFTC's order released on Monday, BNY also failed in its supervisory duties over its swap dealer business. The bank lacked written policies or procedures to monitor the voice communications of associated persons involved in swap transactions, as well as to oversee electronic communications conducted by its associated persons in languages other than English.

These lapses by BNY were in violation of a previous CFTC consent order concerning similar breaches of the Commodity Exchange Act and CFTC regulations. For those earlier violations, BNY paid a $750,000 fine, as outlined in a 2019 order.

In response to the latest violations, BNY has voluntarily engaged an independent compliance consultant, according to the CFTC order. This is in addition to the $5 million fine.

The compliance issues were initially self-reported by BNY to the CFTC in 2020, 2023, and in its annual Chief Compliance Officer (CCO) reports, which are mandated by CFTC regulations. The bank cooperated extensively with the CFTC’s investigation, providing "material assistance" by supplying "specific and complete information" through detailed written summaries of each issue referenced in the order.

In its efforts to rectify the situation, BNY has implemented remedial procedures to address the deficiencies in its swap data reporting obligations, the CFTC noted. Despite the gravity of the situation, BNY did not immediately respond to a request for comment.

By fLEXI tEAM