## Facts

- Deutsche Bank AG was a provisionally registered swap dealer subject to swap-data reporting duties under the Commodity Exchange Act as amended by the Dodd-Frank Act and related CFTC rules.
- In September 2015, the Commodity Futures Trading Commission (CFTC) began an administrative proceeding against Deutsche Bank, alleging swap-reporting failures, including failure to report certain swap data, failure to investigate messages from a swap-data repository, and ongoing technology problems in Deutsche Bank’s reporting system.
- Deutsche Bank retained a consultant to help address its swap-reporting problems and agreed to resolve the administrative matter by paying a $2.5 million fine, taking specified remediation steps, and submitting periodic compliance reports to the CFTC.
- Despite those steps, Deutsche Bank’s reporting problems continued.
- In April 2016, Deutsche Bank’s swap-reporting system crashed, and Deutsche Bank did not report any swap data for five days.
- After the crash, Deutsche Bank identified problems connected to its Business Continuity and Disaster Recovery Plan.
- Additional reporting issues also came to light, including problems related to real-time reporting for foreign-exchange swaps.
- On August 16, 2016, the CFTC filed a federal enforcement action against Deutsche Bank in the Southern District of New York.
- At the same time it filed the complaint, the CFTC submitted a proposed consent order for a preliminary injunction and other equitable relief, calling for appointment of an independent monitor to identify and evaluate swap-reporting problems and oversee remedial work.
- The CFTC argued that appointing an independent monitor served the public interest by supporting fair and orderly swap markets through more reliable reporting.

## Issues

1. In a CFTC enforcement action alleging ongoing swap-data reporting failures, may the court enter a proposed consent order imposing a preliminary injunction and appointing an independent monitor to oversee remedial efforts?

## Decision

- The court entered the proposed consent order of preliminary injunction and other equitable relief.
- The order appointed an independent monitor to identify and evaluate Deutsche Bank’s swap-data reporting problems and oversee Deutsche Bank’s remedial efforts to address them.
- The preliminary relief was entered on consent and did not constitute a final merits adjudication of the CFTC’s claims.

## Legal Principles

- Federal courts may grant preliminary injunctive relief in CFTC enforcement actions seeking to stop or prevent ongoing violations of the Commodity Exchange Act and CFTC rules.
- A court may enter a consent preliminary injunction when the parties agree to interim equitable relief designed to address alleged compliance failures during the litigation.
- As part of equitable relief, a court may appoint an independent monitor to review compliance controls and implementation efforts where the requested measure is tied to correcting alleged reporting and supervisory breakdowns and serves the public interest.

## Conclusion

In CFTC v. Deutsche Bank AG, the district court entered a consent preliminary injunction that installed an independent monitor to assess and oversee Deutsche Bank’s remediation of recurring swap-data reporting failures highlighted by a five-day reporting blackout, treating the monitorship as appropriate interim equitable relief in a federal CFTC enforcement action.


CFTC v. Deutsche Bank AG, 2016 WL 6135664 (2016)