Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

On October 24, 2013, the CFTC Enforcement Division announced its 2013 fiscal year results – 82 filed enforcement actions and record fines of $1.7 billion ($1.5 billion in civil penalties and $200 million in restitution and disgorgement.) The 82 enforcement actions in 2013 brought the total number of enforcement actions over the past three years to 283, nearly double the amount over the three years prior. Go here to read the CFTC news release.

The CFTC brought:

  • Three actions against auditing firms for failing to either (i) follow Generally Accepted Accounting Standards, (ii) safeguard customer assets or (iii) have the requisite knowledge and experience to audit future commission merchants or any entity holding customer segregated accounts;
  • Four actions against companies for failing to diligently supervise employees that either (i) lost significant amounts of money, (ii) employed a trading system that gave the company a pricing advantage over (and harmed) its retail customers, (iii) allowed an account to acquire a significant option position that the account owners could not afford or (iv) ignored warning signs that clients were being procured through fraudulent means; and
  • Six actions using new Dodd-Frank authority that prohibits either (i) disruptive trading, specifically spoofing (bidding or offering with intent to cancel before execution) and (ii) making false statements during CFTC investigations.

Commenting on the results, CFTC Enforcement Director David Meister, who is leaving at the end of the month, said, “As we have begun to enforce our new Dodd-Frank authority on top of the laws that have been on the books for decades, the cases we bring and the sanctions we have obtained reflect the Division’s unwavering commitment to protect market participants and promote market integrity.