November 25, 2019 / 11:00 PM / 10 days ago

UPDATE 2-CFTC enforcement fines, fees jump in 2019, even as activity, civil penalties fall

(Recasts throughout, adds details from report)

By Chris Prentice

WASHINGTON, Nov 25 (Reuters) - The U.S. Commodity Futures Trading Commission collected nearly 40% more in penalties and payments in fiscal 2019, even as civil penalties it assessed and total enforcement actions fell, the regulator said on Monday.

The CFTC obtained monetary relief of more than $1.3 billion in the year ended Sept. 30 from 69 enforcement actions, a 39% increase from the previous year and the fourth-highest total in CFTC history, agency officials said in its annual enforcement report.

The bulk of the monetary total came from disgorgement and restitution, and civil monetary penalties totaled $205.6 million. That was down from $897 million a year earlier and the lowest level since 2010, according to CFTC data.

Total activity was down from the previous year's 83 but remained slightly above the prior five-year average of 67.5, the report showed. It encompassed a transition year for the agency, with Heath P. Tarbert taking the helm as chairman in mid-July.

The CFTC said it filed 48 of the enforcement actions after Tarbert started in the role.

"Tough, but fair – that’s been our response to those who break the rules," Tarbert said in a statement on the report. "A strong enforcement program is about preserving market integrity, protecting consumers, and deterring misconduct from taking place."

The 2019 tally included the CFTC's second-highest number of cases against manipulative conduct and spoofing for any year, after 2018. The agency established a spoofing task force in 2018.

Nearly two-thirds of the actions involved commodities fraud, manipulative conduct, false reporting or spoofing.

"The breadth and significance of the enforcement activity in FY 2019 is reflected in the fact that the filed cases involved some of the most significant commodities fraud, manipulation, and spoofing cases in the history of the agency,” said CFTC Director of Enforcement James McDonald.

That included actions against Societe General International Limited and HSBC's U.S. unit and a spoofing case against a former JP Morgan precious metals trader.

The CFTC filed a record 16 cases in parallel with criminal authorities in fiscal 2019.

The agency received 117 claims for whistleblower awards in 2019, on par with the previous year. CFTC awarded 5, the same level as in 2018. The scale of those awards was much lower, totaling $15.4 million versus 2018's $75.6 million.

Reporting by Chris Prentice, Editing by Franklin Paul, Grant McCool and Dan Grebler

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