Swaps Trader to Pay $90,000 After He Deleted Messages and Misled CFTC Investigators

The Facts

John Patrick Gorman III is a U.S. citizen who, according to the order, currently resides in the United Kingdom. From February 2015 through at least early 2021, he worked as a U.S. dollar swaps trader and managing director at a global investment bank, identified in the order only as “the Bank.” The order states he remains employed there.

The case traces back to a CFTC investigation into trading by Gorman and the Bank in interest rate swaps connected to bond issuances, including Gorman’s trading on February 3, 2015. The order does not describe what, if anything, the investigation ultimately concluded about that trading itself. What it describes in detail is what happened four years later, once the CFTC came looking for records of it.

The Preservation Request, and What Happened After It

On March 15, 2019, the CFTC’s Division of Enforcement sent Gorman, through his lawyer, a request to preserve records. It covered communications with current or former Bank employees, anything touching the CFTC’s investigation, bond issuances, or related swap and treasury trading, and messages on apps including WhatsApp, Telegram, Slack, and Signal, whether stored locally or backed up to the cloud. The window ran from March 2014 forward.

A preservation request is exactly what it sounds like: an instruction not to delete anything the request covers, sent before a formal subpoena arrives. It carries no independent legal penalty for noncompliance the way a subpoena does, but ignoring one can look very different once the underlying facts come out.

Gorman learned about the request on March 16, 2019, when he received a copy by email.

The order’s findings state that after that date, Gorman deleted messages covered by the request, including WhatsApp messages.

Six days later, on March 21, 2019, the Division escalated to a subpoena. This one demanded, among other things, all communications from January 2015 forward concerning the CFTC, bond issuances, or related swap and treasury trading, plus every communication Gorman had with Bank colleagues between February 2 and February 5, 2015, the window bracketing the trade under investigation. The subpoena’s instructions noted that Gorman had a continuing duty to supplement his responses.

What the Forensic Image Found

Investigators imaged Gorman’s personal phone on April 24, 2019. At that point, according to the findings, it contained no WhatsApp messages responsive to the March subpoena at all.

Specific messages the Division says should have been there were not. Among them: WhatsApp messages from March 5, 2019, roughly a month after the preservation request went out, between Gorman and a colleague identified in the order only as the “Desk Head,” concerning the CFTC’s investigation itself.

The phone also contained only a partial record of Gorman’s texts with the Desk Head and another colleague identified as the “Swaps Trader” about the February 3, 2015 trading. In one exchange, the findings state, the phone held ten messages Gorman traded with the Swaps Trader inside a single 20-minute window, missing exactly one message in the middle of that conversation. The Division recovered it anyway.

The order does not explain why investigators consider the recovered message significant to the underlying trading conduct. What it establishes is narrower and, in some ways, more straightforward: the message existed, it was covered by the preservation request, and by the time the phone was imaged, it was gone, while everything around it in the same conversation survived.

Telling the CFTC He Had Complied

On May 1, 2019, in response to the Division’s request that he confirm his compliance in writing, Gorman’s counsel sent a letter to CFTC staff.

“Since learning of the Voluntary Preservation Request on March 16, 2019, Defendant has not destroyed or altered any documents covered by the Voluntary Preservation Request’s terms.”

The order’s findings state Gorman knew the Division had asked for that statement, and that his lawyer sent it based on information Gorman himself provided.

Six months later, on November 20, 2019, Gorman appeared for voluntary sworn testimony at the CFTC’s Eastern Regional Office in New York. The order’s findings describe the exchange in detail.

Set against the phone image from seven months earlier, the two accounts do not line up easily. A trader who says the only step he took after a preservation request was upgrading his iCloud storage is describing a passive, almost incidental relationship with his own message history. The findings describe an active one: messages covered by the request disappearing selectively, with the surrounding conversation intact.

The Order’s Findings on What Was False

The order’s findings conclude that Gorman’s statements in the May 2019 letter and the November 2019 testimony were false and misleading. According to the findings, Gorman had in fact deleted messages covered by the preservation request after he learned about it, and he had communicated with Bank employees outside the swaps desk about Bank business, not purely social matters as he testified. The findings state Gorman knew, or reasonably should have known, that his statements were false or misleading at the time he made them.

The findings also address why any of this mattered legally: the statements were material, meaning they were capable of influencing a CFTC decision or hindering the agency’s investigation. Materiality is a required element under the statute at issue here, and it is a lower bar than proving the statement actually changed the investigation’s outcome. The question is whether it was the kind of information a regulator would care about, not whether it did.

What This Consent Order Actually Decided

It is worth being precise about what happened procedurally. This is not a case where a judge heard testimony and ruled on contested facts. It is a settlement. Gorman agreed to the order’s entry, including its Findings of Fact and Conclusions of Law, but the order states he did so without admitting any of those findings, except as to the court’s jurisdiction over him and the case’s venue in the Southern District of New York, both of which he did admit.

The order does contain one notable wrinkle. While Gorman did not admit the findings, he did agree that the CFTC can treat those findings as true and give them preclusive effect in any future proceeding the Commission brings against him, with narrow exceptions such as bankruptcy or an action to enforce the order itself. He specifically did not agree that other parties, outside the Commission, could use this order or its findings against him in unrelated proceedings. In practical terms: the findings function as established fact between Gorman and the CFTC going forward, but they are not a public, general-purpose admission of guilt that anyone else could point to in a different lawsuit.

The court’s role here was to review the negotiated terms, find good cause to enter them, and direct that the findings and conclusions be entered “pursuant to” the relevant statute. The order itself states the findings are not binding on any other party to the action.

What the Government Alleged and What It Got

The CFTC’s original complaint, filed February 1, 2021, contained three counts. This consent order resolves only one of them: Count III, the false statements charge under Section 6(c)(2) of the Commodity Exchange Act, which prohibits knowingly or recklessly making a false or misleading statement of material fact to the Commission, or omitting a fact necessary to make a statement not misleading.

Counts I and II were dismissed with prejudice as part of the settlement, meaning the CFTC cannot refile them later. The order does not state what conduct those counts targeted or why they were dismissed rather than settled or litigated. Readers should not assume dismissal with prejudice reflects a finding on the merits of those counts one way or the other. The document simply does not say.

In exchange for Gorman’s consent, the CFTC obtained two things: a permanent injunction and a monetary penalty.

The injunction permanently bars Gorman from making, directly or indirectly, any false or misleading statement of material fact to the CFTC, or omitting a fact necessary to keep a statement from being misleading, where he knows or reasonably should know it’s false or misleading. It binds not just Gorman but, per the order, anyone acting on his behalf or in active concert with him who receives notice of it.

The $90,000 penalty was due within ten days of the order’s entry, with post-judgment interest accruing on any unpaid balance.

What a Legitimate Fix Looks Like

Everything below is analysis, not something the order itself recommends. The order resolves one individual’s case; it does not prescribe systemic changes. But the failure modes it documents, an individual under investigation controlling his own device and his own account of compliance, are not unique to this case, and they point toward a few concrete areas worth examining.

What to Watch

The consent order closes the false-statements count against Gorman with a permanent injunction and a penalty, but it leaves two of the original three counts unexplained and the underlying 2015 trade unaddressed. What the record does establish, clearly and in Gorman’s own recorded words, is a gap between what a forensic image of his phone showed in April 2019 and what he told the CFTC, in writing and under oath, later that year. That gap, not the swaps trade that started the investigation, is what this order is actually about.

The source document for this investigation is attached below.