Société Générale agreed to pay a fine of US $450,000 to settle charges brought by the Commodity Futures Trading Commission that, from July 2014 through April 2015, it failed to timely report transaction information regarding certain of its FX swaps, FX forwards and non-deliverable forwards to a registered swap data repository, as required by the CFTC. During the relevant time, Société Générale was a provisionally registered swap dealer with the CFTC. According to the Commission, in January 2015, Société Générale recognized on its own that, because of a coding error, its computer system improperly flagged the counterparty as the reporting party for a swap transaction in all circumstances. As a result, neither party, during the relevant time, made required reports of such transactions to an SDR, including the requisite continuation data. The bank promptly began to fix the error that was resolved by April 2015. Subsequently, the bank back-loaded its missed reports. In settling with Société Générale, the CFTC expressly recognized the bank’s “significant cooperation” during the investigation that included “self-reporting, undertaking an internal investigation and taking remedial steps to correct its reporting failures.”

Compliance Weeds: Previously, staff of the Commission’s Division of Swap Dealer and Intermediary Oversight published a Staff Advisory reminding swap dealers and major swap participants of their obligations to report certain swap data timely and accurately (click here to access). Staff noted “diverse reporting issues and failure,” with certain types of errors occurring “with some frequency”; readily apparent errors; incomplete reporting; duplicative swap reporting; calculation errors; and reporting delays. Staff recommended utilizing certain measures or processes to enhance reporting quality; data gatekeepers; automated review of reported data; erroneous record checks; and improved changed management practices to help mitigate potential issues. Staff also reminded SDs and MSPs that if they utilize third-party service providers to report swap data, they still remain “responsible” for complying with applicable requirements. As a result, SDs and MSPs should be routinely monitoring the accuracy and timeliness of their data reporting. Staff’s warning at the end of their advisory sounds ominous: “this advisory should not be construed in any way as excusing past violations or limiting the CFTC’s ability to pursue any actions for reporting violations.” In addition to this current matter against Société Générale, the CFTC previously filed and settled charges against other swap dealers, including Deutsche Bank AG. As a result of charges against Deutsche Bank in 2015, the bank agreed to pay a fine of US $2.5 million and to enhance controls around its swaps reporting. (Click here for more information in the article, “Swaps Dealer Agrees to US $2.5 Million Fine to Resolve Charges by CFTC That It Misreported Certain Swap Transactions” in the October 4, 2015 edition of Bridging the Week.) More recently, the bank was sued a second time by the CFTC for alleged recidivist reporting violations; the parties have agreed to resolve that matter too. (Click here for more information in the article, “Swap Dealer Sued in Federal Court by CFTC for Recidivist Reporting Violations; Acknowledges Bank’s Cooperation” in the August 21, 2016 edition of Bridging the Week.)