U.S. derivatives regulators have settled allegations with JPMorgan Chase unit J.P. Morgan Securities LLC, alleging that it repeatedly filed inaccurate reports on the activity of large traders.
The U.S. Commodity Futures Trading Commission (CFTC) issued an order today settling charges against J.P. Morgan Securities for submitting inaccurate reports to the CFTC. The firm has agreed to pay a US$650,000 civil monetary penalty, and to certify that it has revised its compliance systems, to settle the allegations.
The violations relate to required reporting of positions held by the firm’s clients that are defined as large traders. The CFTC uses the reports, which are known as ‘large trader’ reports, to evaluate potential market risks and monitor compliance with its rules.
The regulator says that the reporting violations occurred despite the CFTC notifying the firm of numerous errors in its reports, which increased throughout the year, starting in 2012. It says that the firm, which was relying on a third-party vendor that generated the reports, assured CFTC staff that the problems would be resolved by the end of January 2013. However, it says the firm continued to submit reports that contained hundreds of errors between February 2013 and February 2014.
“The large trader reports are vital to the CFTC’s role in monitoring market behavior and are important to members of the public, many of whom rely on that information in forming trading strategies. Therefore, submission of accurate and reliable data to the CFTC is essential,” says CFTC director of enforcement, Aitan Goelman. “The CFTC will be vigilant in enforcing these rules in order to ensure the integrity of the regulatory structure and to maintain transparency in the markets.”