WASHINGTON — The Commodity Futures Trading Commission announced a $400,000 settlement with Wells Fargo over violations of agency reporting rules related to the bank’s swaps business — the latest in a string of public relations headaches for the embattled bank.
In an order issued Tuesday, Wells agreed to pay $400,000 in civil penalties to the CFTC for a slew of reporting errors in its Large Trader Reports — regular reports that Wells, as a provisionally registered swaps dealer, was required to submit related to its transactions.
The order said that between March 2013 and November 2015, "every LTR report submitted by [Wells] failed to meet" relevant reporting requirements, omitting or improperly reporting basic data like the reporting entity identifier, swaption expiration dates and notional values, or whether swaps were puts or calls, among other information.
"Large trader reporting for physical commodity swaps is essential to the commission's ability to conduct effective surveillance of markets in U.S. physical commodity futures and economically equivalent swaps," the order said. "The accuracy of the reports is critical to the mission of the Commission for numerous reasons, including surveillance of the markets to detect disruptions to market integrity, enforcement and calculating statistics that the commission publishes to enhance market transparency."
The Dodd-Frank Act empowered the CFTC to oversee the previously unregulated market for over-the-counter derivatives, commonly known as swaps. The agency issued rules requiring any entity that buys or sells more than $8 billion in swaps a year to register as a swaps dealer, thus subjecting it to enhanced reporting requirements and other rules. There are more than 100 provisionally registered swaps dealers, including many of the largest U.S. and foreign banks.
The fine, while relatively modest, comes amid heightened scrutiny of Wells after revelations that thousands of its employees fraudulently opened accounts for customers without their knowledge, bilking them out of millions in fees. The bank settled civil charges with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency earlier this month for $190 million, but the bank’s chief executive, John Stumpf, has faced repeated calls to resign.
Also on Tuesday, the Labor Department announced it would launch a probe into whether Wells violated the Fair Labor Standards Act and other labor laws related to the scandal.