October 2, 2018 / 5:02 PM / 2 months ago

U.S. regulator enforcement actions jump 25 pct, rebutting Democrat fears

WASHINGTON, Oct 2 (Reuters) - The number of enforcement actions brought by the U.S. swaps regulator has jumped 25 percent compared with the previous administration, rebutting fears the agency would go soft on the financial industry under President Donald Trump.

The chairman of the Commodity Futures Trading Commission (CFTC) Christopher Giancarlo unveiled the agency’s latest enforcement figures on Tuesday in a speech that he used to underscore the agency’s commitment to punishing wrongdoing.

“There will be no pause, no let up, and no relaxation in the CFTC’s efforts to enforce the law and punish wrongdoing. We must keep the markets safe and fair for consumers,” Giancarlo told the Economic Club of Minnesota.

During the fiscal year which ran from October 2017 through September 2018, the CFTC filed 83 enforcement actions, and an approximately 25 percent increase from each of the last three years of the President Obama administration, Giancarlo said.

The total amount of civil monetary penalties imposed by the agency was around $900 million, and higher than five of the eight years from 2009 to 2016, he said.

Compared directly with fiscal year 2017, the number of enforcement actions grew 69 percent, while penalties more than doubled, CFTC data shows, although the agency has said those numbers are skewed because it was a transition year.

A lawyer who previously worked on Wall Street, Giancarlo was appointed as a Republican CFTC Commissioner by former President Barack Obama in 2014 and was appointed chairman by Trump in August 2017.

Democrats and consumer groups have raised fears that the CFTC and the Securities and Exchange Commission (SEC), among other financial regulators, would pull back from policing Wall Street under Trump. Republicans say that penalties hurt Main Street employers and shareholders, damaging economic growth.

On Tuesday, Giancarlo addressed these concerns, arguing strong enforcement, by protecting markets, is essential for growth.

“For the economy to grow, businesses and individuals need to know they’re competing on a level playing field ... Unlawful activity puts honest businesses at a disadvantage. It impedes free and fair competition,” the CFTC chairman said.

Giancarlo brought on board James McDonald, a former prosecutor in the Southern District of New York, to head up the CFTC’s enforcement division in March 2017.

He has focused on pursuing market manipulation and bringing criminal actions in conjunction with the Justice Department, leading to a landmark against UBS, HSBC and Deutsche Bank and several of the banks’ traders earlier this year.

Like the SEC, McDonald has also focused on holding more individuals accountable, a strategy Giancarlo said was becoming widely recognized as “one of the most effective ways to combat corporate misconduct”.

This strategy was brought into focus on Saturday when the SEC said it had personally fined Tesla Inc CEO Elon Musk for securities fraud. (Reporting by Michelle Price Editing by Susan Thomas)

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