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Washington

CFTC hit enforcement records in fiscal 2018, enforcement director says

Enforcement by the U.S. Commodity Futures Trading Commission hit records in the past fiscal year, including market manipulation cases, said James M. McDonald. enforcement director.

Speaking at NYU Law School on Wednesday, Mr. McDonald said the enforcement division's first annual report, released Thursday, "shows that, by any measure, enforcement during the past fiscal year has been among the most vigorous in the history of the CFTC."

That includes the third highest number of filed cases, the fourth highest amount of penalties imposed, the highest number of large-scale matters, the greatest number of cases involving manipulative conduct, the highest number of parallel criminal actions, the biggest percentage of cases charging individuals and the most number and amount of whistleblower awards, he said, according to a transcript of the speech on the CFTC's website.

Those results align with enforcement priorities last year that focused on preserving market integrity, protecting customers, promoting individual accountability and better coordination with other regulators and criminal authorities.

With market manipulation cases, the CFTC focused on price discovery misconduct like manipulation, spoofing and disruptive trading, he said. The CFTC averaged six of those cases each year from 2009 to 2017 but filed 26 in the last fiscal year alone.

CFTC enforcement officials prosecuted fraud against consumers in traditional areas like precious metals, foreign exchange and binary options, but “we also saw some fraudsters evolve, as they sought to use new products or new technologies to target unwitting customers in markets like virtual currencies,” Mr. McDonald said, noting several trial victories, including a major one involving bitcoin fraud.

CFTC's tactic to hold individuals accountable, including those who abet or supervise them, led to charges against supervisors and even one board chairman in cases brought against financial institutions, proprietary trading firms and managed funds last year.

While the enforcement division has had to respond to a dramatically expanded jurisdiction mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the resulting new rules allowed the division to bring many of its first-of-their-kind cases, the transcript said.