Corlytics has released its regulatory enforcement data for Q3, showcasing a surge in regulatory actions, record fines, and a stronger emphasis on senior staff conduct.
Regulators across multiple jurisdictions have made headlines by imposing historic penalties, breaking new ground in enforcement practices, and intensifying focus on compliance failures.
In a landmark case, the Commodity Futures Trading Commission (CFTC) in the US secured a $12.7bn judgment against FTX and Alameda. This case, stemming from the dramatic collapse of FTX two years ago, exposed fundamental shortcomings in governance, customer protections, and surveillance. The CFTC emphasised that the absence of these regulatory tools contributed directly to the catastrophic downfall.
Recordkeeping failures have remained a major enforcement area in the US, particularly with the rise of off-channel communications like WhatsApp. Regulators have stressed the importance of self-reporting and cooperation, with the Securities and Exchange Commission (SEC) noting that proactive measures could lead to reduced penalties.
Consumer protection was another focus for US regulators during the quarter. The Consumer Financial Protection Bureau (CFPB) imposed a $20m fine on TD Bank for providing inaccurate negative information to credit reporting agencies.
In the UK, the Financial Conduct Authority (FCA) broke new ground by issuing its first-ever fine against an audit firm. PwC was penalised for failing to report concerns about potential fraudulent activity at London Capital & Finance. This decision signals a notable expansion of the FCA’s enforcement scope into audit practices.
The FCA also targeted financial crime controls, levying a nearly £30m fine against Starling Bank. The regulator described the bank’s financial crime screening systems as “shockingly lax,” setting a precedent for stricter oversight in the sector.
Commenting on these trends, Corlytics head of legal and regulatory analysis Susie MacKenzie said, “We have seen the regulators roar into action in this third quarter, not only in terms of the amount of fines imposed but also with some enforcement firsts. One action stands out for both its magnitude and profile: two years ago, the collapse of FTX sent shock waves through the crypto industry, raising fears of a prolonged ‘crypto winter.’
“In August, the CFTC obtained a $12.7 billion judgment against FTX and Alameda. The CFTC identified fundamental failures, stating that ‘the basic regulatory tools, like governance, customer protections, and surveillance that exist to identify misconduct and ultimately prevent collapse, were simply not there.”
She added, “As we continue to monitor regulatory trends, it’s clear that the SEC is intensifying its focus on senior employee conduct. This quarter, they’ve emphasised the importance of self-reporting and cooperation, stating that these actions may lead to significantly reduced penalties. In light of ongoing enforcement, particularly around recordkeeping failures due to off-channel communications, firms must remain vigilant. This changing environment shows how important proactive compliance measures are.”
The report can be read here.
