CFTC Official Advocates for the Establishment of a National Financial Fraud Database

Christy Goldsmith Romero, a commissioner at the Commodity Futures Trading Commission (CFTC), has proposed the creation of a federal registry designed to streamline access to information related to past financial fraud convictions and civil fines.

Addressing attendees at an industry conference, Goldsmith Romero expressed her commitment to urging U.S. regulators to establish a searchable, centralized database dedicated to financial misconduct records. This database, if realized, would greatly facilitate public access to critical information, empowering individuals and law enforcement agencies to better guard against fraudulent activities.

"This would be a comprehensive record that the public can easily check before giving someone their money, their trust and their business," remarked Goldsmith Romero.

While certain regulatory bodies currently maintain databases containing disciplinary actions and consumer complaints, there exists no unified national database that would facilitate efficient cross-referencing of information across federal agencies and state regulators. A centralized registry would provide a holistic view of financial misconduct, serving as a valuable tool to identify repeat offenders and act as a deterrent to potential fraudsters.

Goldsmith Romero first proposed the idea of such a registry during her tenure as the watchdog overseeing a critical 2009 financial crisis bailout program. Since joining the CFTC as one of its commissioners in March 2022, she has revisited this concept, emphasizing its relevance, particularly in the context of the cryptocurrency space, which has seen a proliferation of fraud cases.

"We know that fraud is massively present in the crypto space, but there's so much disjointed information for people to try to get to," she explained during an interview with Reuters.

Drawing from her prior experience, Goldsmith Romero launched a database of financial crimes related to the Troubled Asset Relief Program, demonstrating the feasibility and potential benefits of such an initiative. This earlier effort could serve as a model for a broader national registry, one that federal and state regulators could collaborate on.

However, Goldsmith Romero acknowledged that creating a national financial fraud database would present formidable challenges. Determining which agency should host the database and securing the initial funding necessary to initiate the project would require careful consideration and coordination among regulatory bodies.

Nevertheless, the proposal underscores a commitment to strengthening the nation's defenses against financial fraud, aligning with broader efforts to safeguard investors and uphold the integrity of the financial system. If realized, a national financial fraud database could become a pivotal tool in the fight against financial misconduct, benefiting both regulators and the investing public alike.