September 27, 2016

CFTC Orders Wells Fargo Bank, N.A. to Pay a $400,000 Penalty for Inaccurate Large Trader Reports for Physical Commodity Swaps Positions

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today filed and simultaneously settled charges against Wells Fargo Bank, N.A. (Wells Fargo) for failing to comply with its obligations to submit accurate large trader reports (LTRs) for physical commodity swap positions, in violation of Section 4s(f)(1)(A) of the Commodity Exchange Act (CEA) and CFTC Regulations 20.4 and 20.7. Wells Fargo has its main office in Sioux Falls, South Dakota, and has been provisionally registered with the CFTC as a Swap Dealer since December 31, 2012.

The CFTC Order requires, among other things, that Wells Fargo pay a $400,000 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 U.S. physical commodity futures and economically equivalent swaps. The Order makes clear that as of March 1, 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 March 1, 2013 through November 13, 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 analyzed 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.

The CFTC appreciates the assistance of Richard Galloway, Regina Sanders, and Edward Wehner of the CFTC’s Office of Data Technology.

The CFTC Division of Enforcement staff members responsible for this case are Neel Chopra, Joseph Muoio (previously on detail from the U.S. Department of Justice, Antitrust Division), Michael Cazakoff, Candice Aloisi, Lenel Hickson Jr., and Manal Sultan.

Media Contact
Dennis Holden
202-418-5088
 

Last Updated: September 27, 2016