29 Sept. 2020 (AlJazeera-Bloomberg)
JP Morgan Chase & Co. admitted wrongdoing and agreed to pay more than $920 million to resolve U.S. authorities’ claims of market manipulation involving two of the bank’s trading desks, the largest sanction ever tied to the illegal practice known as spoofing.
Over eight years, 15 traders at the biggest U.S. bank caused losses of more than $300 million to other participants in precious metals and Treasury markets, according to court filings on Tuesday. JP Morgan admitted responsibility for the traders’ actions. The Justice Department filed two counts of wire fraud against the bank’s parent company but agreed to defer prosecution related to the charges, under a three-year deal that requires the bank to report its remediation and compliance efforts to the government.
The New York-based lender will pay the biggest monetary penalty ever imposed by the Commodity Futures Trading Commission, including a $436.4 million fine, $311.7 million in restitution and more than $172 million in disgorgement, according to a CFTC statement. The CFTC said its order will recognize and offset restitution and disgorgement payments made to the Department of Justice and Securities and Exchange Commission.
Allegations of spoofing on the bank’s precious metals desk emerged more than a year ago, in charges against several traders on the desk. But the settlement announced Tuesday also includes new allegations about spoofing by traders on the bank’s Treasuries desk.
The deal faults the bank for nearly eight years of manipulating prices of Treasury contracts, as well as trading in notes and bonds in the secondary market, that caused $106 million in losses. The government said five now-former JPMorgan traders executed thousands of deceptive trades. None of those traders have been charged publicly.
The accord also ends the criminal investigation of the bank that led to a half dozen employees being charged for allegedly rigging the price of gold and silver futures from 2008 to 2016. Two have entered guilty pleas, and three traders and a former JPMorgan salesman are awaiting trial. In all, according to the settlement deal, 10 JPMorgan traders caused losses of $206 million to other parties in the market.
“For nearly a decade, a significant number of JPMorgan traders and sales personnel openly disregarded U.S. laws that serve to protect against illegal activity in the marketplace,” said Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office.
JPMorgan, in a statement, said it doesn’t expect any disruption of service to clients as a result of the resolutions.