CFTC Releases FY 2023 Enforcement Results

On November 7, 2023, the Commodity Futures Trading Commission (CFTC) released its enforcement results for fiscal year 2023 which reveals an exceptionally high number of cases related to digital assets-related issues, regulatory obligation violations, market manipulations, and other serious misconduct. In fact, the Division of Enforcement (DOE) initiated 96 actions, tackling fraud, manipulation, and various violations across diverse markets, resulting in over $4.3 billion in penalties, restitution, and disgorgement.
In this context, Chairman Rostin Behnam emphasized the agency’s relentless focus on combatting fraud and manipulation to maintain financial market stability and confidence and commended the DOE’s expertise in fighting illicit activities. Below, there are some key highlights of the 2023 enforcement results; a detailed table listing all enforcement actions, including those involving digital asset-related (mis)conduct may be found here.
#### Key highlights of FY 2023
– The DOE initiated 47 actions in the digital asset sector targeting various digital asset-related misconducts. These actions comprised over 49% of all actions during this period.
– The types of misconduct involved cross-market manipulation in blockchains, misappropriation by major digital asset exchanges, or operating illegal digital asset derivatives exchanges.
– The DOE also initiated a number of cases relating to manipulative and deceptive conduct and spoofing where a trader places orders with the intent to cancel them before they are executed, creating a false impression of demand or supply in the market.
– A notable settlement involved HSBC which was convicted of „manipulative and deceptive trading related to swaps with bond issuers, spoofing, and supervision and mobile device recordkeeping failures“.
– Spoofing also occurred in soybean futures, soybean meal futures, and soybean oil futures contracts traded at the Chicago Board of Trade and in crude oil and natural gas futures contracts traded on the Chicago Mercantile Exchange.
– Another key area of action was misconduct as regards compliance with recordkeeping and reporting regulations, the implementation of effective risk management programs, and the maintenance of robust compliance programs.
– Settlements were thereby reached with three large banks (Goldman Sachs, JPMorgan Chase Bank, and the Bank of America) in connection with swap data reporting failures and failures to disclose pre-trade information.
– The DOE also filed various cases involving customer protection issues such as misleading customers to invest in high-risk commodity transactions or offering products to customers without being authorized.
—
To conclude, the CFTC notes that its Whistleblower Program continued to play a significant role in many enforcement cases, leading to successful enforcement actions and substantial awards for individuals providing „whistleblowing“ information. Also, the CFTC has launched various task forces focusing on cybersecurity, emerging technologies, environmental fraud, and other substantive areas to detect fraud at an early stage.
Furthermore, collaboration with regulatory and criminal authorities remained a cornerstone of the CFTC’s enforcement strategy, aiming to deter misconduct, preserve market integrity, and protect market participants. Joint civil enforcement actions and parallel investigations with state and federal bodies reinforced these efforts.
The CFTC will not refrain from taking all measures necessary to safeguard the U.S. commodity market.