The Commodity Futures Trading Commission (CFTC) today announced its 2020 annual enforcement and compliance results, highlighted by a series of high-impact cases involving charges with manipulation, spoofing, and unlawful use of customer funds.
During CFTC’s 2020 fiscal year, which spanned October 1, 2019 to September 30, 2020, the agency’s staff handled a record 113 enforcement actions levied to ensure market participants meet their requisite regulatory requirements.
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The report also highlights several initiatives by the CFTC’s Division of Enforcement focused on supporting its whistleblowers program. Whistleblowing has become a staple of multiple US regulatory regimes, namely those of the US Commodity Futures Trading Commission (CFTC) and the SEC.
The CFTC said that it secured enforceable commitments through landmark settlements of several high-profile cases spanning the entire spectrum of the marketplace. Examples of misconduct included benchmark rate manipulation, spoofing and retail fraud involving cryptocurrencies.
The nation’s derivatives watchdog also highlighted its cooperation with 30 states regulators in bringing up charges against precious metals dealers that solicited $185 million from 1,600 seniors and other vulnerable investors. This scheme had grown at an unprecedented pace, with nearly a dozen companies and their principals charged by the CFTC.
COVID-19 Scams Continue to Pop Up
With specific regard to spoofing, JPMorgan Chase was ordered to pay $920 million to resolve civil and criminal charges that its traders rigged precious metals and Treasury futures markets. The record fine wrapped up a long-running lawsuit that saw federal prosecutors at the Justice Department Fraud Section and top US regulators involved in the probes.
On the foreign exchange front, the CFTC has been active recently in its cleanup of the forex space with charges being brought against a dozen of brokers and trading apps.
Just last week, the agency hit Gain Capital Group, the largest retail FX broker in the United States, with a civil penalty of $300,000 to resolve allegations over its handling of customer accounts introduced by Illinois broker, Mark Miller and his investment firm, Foremost Trading.
Earlier in June, Gain Capital UK was also ordered to pay a fine of $250,000 over allegations it signed up US investors to its FX trading platform. It has also agreed to disgorge $241,671 and to ‘cease and desist’ from any futures breaches. Further, OANDA Corporation paid a $500,000 fine for failing to adhere to certain regulations, including that it failed to meet minimum capital requirements.
“Aggressively pursued fraud occurring during the COVID-19 pandemic, at a time when victims may be particularly vulnerable, filing 29 associated cases since a national emergency was declared on March 13, 2020. In the midst of a pandemic, when volatility in the market is high, it is even more important that our team work tirelessly to preserve market integrity and pursue those who break our rules,” said Director of Enforcement James McDonald.
The US regulators have recently warned Americans about criminals trying to steal their funds using several scams tied to the coronavirus pandemic. Moreover, they warned of the substantial potential for fraud at this time, saying that crooks often try to capitalize on high-profile news events to lure investors into financial cons.
Furthermore, the CFTC identified fraudsters urging people to invest in new stocks related to the disease as among the most prevalent scams attempting to take advantage of the coronavirus outbreak.
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