In the Matter of Commerzbank AG

Commerzbank AG (defendant) provisionally registered with the Commodity Futures Exchange Commission (CFTC) (plaintiff) as a swap dealer on December 31, 2012. As alleged by the CFTC, from that date through 2018, Commerzbank failed to properly supervise its swap-dealer activities. Upon investigation by the CFTC, Commerzbank agreed to enter into a settlement, pursuant to which the CFTC entered certain findings of fact. The CFTC found that Commerzbank’s compliance staff knew of material compliance inadequacies, including failure to implement policies to detect swaps with foreign counterparties, failure to report information to swap-data repositories, failure to submit large-trader reports, and failure to execute swaps on regulated swap-execution facilities. In 2014 Commerzbank hired a Big Four accounting firm to conduct a compliance review. The consultant’s findings were memorialized in a report completed in May 2014 and then circulated among Commerzbank compliance staff. The report indicated that there were over 70 compliance gaps, 36 of which posed a high risk of resulting in noncompliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act. In Commerzbank’s chief compliance officer (CCO) reports covering 2014 and 2015, Commerzbank deliberately omitted these compliance gaps, although Commerzbank conceded to one relatively minor compliance issue. Further, Commerzbank made statements that their compliance policies and procedures were effective. The CFTC found these statements and the omission of the findings of the consultant’s report to be misleading in material respects.