On October 6, 2020, the Commodity Futures Trading Commission (“CFTC”) issued a release describing its record-breaking enforcement year.[1] The release noted that in fiscal year 2020 (“FY2020”),[2] the CFTC filed more enforcement actions than any other year in the history of the agency. CFTC Chairman Heath P. Tarbert stated “[w]e are tough on those who break the rules, and this historic year only further underscores this point.”
The most recent headlines emphasize the CFTC’s enthusiasm in pursuing spoofing-related actions. Of note, the CFTC ordered a registrant and affiliates associated with one of the largest bank holding companies to pay a record $920 million for spoofing and manipulation that spanned over eight years.[3] This penalty comes as the largest monetary relief in the agency’s history. In September alone, the CFTC announced three other spoofing settlements with fines totaling nearly $1.8 million, and brought charges against a trading firm and two of their traders.[4]
The record enforcement results, however, have not been driven entirely by spoofing. The CFTC filed 113 enforcement actions over FY2020. This is up from 69 actions filed in FY2019, 83 actions filed in FY2018, and 49 actions filed in FY2017,[5] including significant actions in coordination with 30 state authorities for a scheme to defraud elderly victims. Further, the CFTC specifically called out the unusual circumstances the COVID-19 pandemic has presented. Since the start of the pandemic on March 13, 2020, the agency filed 29 cases pursuing fraud related to COVID-19. A full list of FY2020 CFTC enforcement actions can be found on its website.
The CFTC also announced that it would continue to emphasize coordination and cooperation in bringing parallel actions with other criminal authorities and regulatory agencies targeting similar conduct. As noted above, spoofing enforcement has been a particular area of interest for coordinated enforcement. Coordination between the CFTC and the Department of Justice has been increasing steadily over the past few years. During FY2019, the CFTC filed 16 enforcement actions parallel with criminal charges, which was an increase over the 14 parallel actions filed in 2018, and the two parallel actions in 2017.[6] For additional information outlining the CFTC’s previous Annual Reports, see here. In August 2020, the CFTC settled charges against an international bank, imposing a total of $77.4 million in penalties and equitable relief, while the Department of Justice entered a coordinated deferred prosecution agreement against this bank.[7] The CFTC and DOJ also worked to coordinate enforcement and prosecution for spoofing conduct at a German-based global bank.[8] The CFTC noted that full details of FY2020 enforcement actions will be released as part of the agency’s annual Enforcement Report set to be published later this year.
In a second press release issued October 6, 2020, the CFTC announced the departure of Enforcement Director James McDonald. Mr. McDonald served as the Director since April 2017 and departed on October 8, 2020.[9] Vince McGonagle, Principal Deputy Director of the Division of Enforcement, will serve as Acting Director.
[1] https://www.cftc.gov/PressRoom/PressReleases/8274-20?utm_source=govdelivery
[2] CFTC Fiscal Year 2020 ended on September 30, 2020.
[3] https://www.cftc.gov/PressRoom/PressReleases/8260-20
[4] https://cftc.gov/PressRoom/PressReleases/8259-20; https://cftc.gov/PressRoom/PressReleases/8265-20; https://cftc.gov/PressRoom/PressReleases/8267-20; https://cftc.gov/PressRoom/PressReleases/8261-20.
[5] https://www.law360.com/articles/1317260/cftc-calls-fy20-a-record-breaking-year-for-enforcement.
[6] https://www.cftc.gov/media/3081/ENFAnnualReport112519/download
[7] https://www.cftc.gov/PressRoom/PressReleases/8221-20
[8] https://www.cftc.gov/PressRoom/PressReleases/8185-20
[9] https://www.cftc.gov/PressRoom/PressReleases/8275-20?utm_source=govdelivery