Topline

JPMorgan Chase will pay a record $920 million to resolve a criminal investigation by three federal agencies over its role in the alleged manipulation of precious metal and Treasury markets, federal regulators said on Tuesday.

Key Facts

JPMorgan agreed to a settlement that resolves investigations by the Justice Department, Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).

As part of the deal, the bank will admit to wrongdoing and pay a record fine of $920 million, according to a statement from the CFTC on Tuesday.

The fine is the largest ever imposed on a bank for spoofing, a type of market manipulation where traders flood markets with orders they don’t actually execute with the intention of creating an illusion of demand.

The practice was banned in 2008 after the financial crisis, and in recent years federal regulators have ramped up efforts to crack down on market manipulation.

The charges against JPMorgan were for “manipulative and deceptive conduct and spoofing that spanned at least eight years and involved hundreds of thousands of spoof orders in precious metals and U.S. Treasury futures contracts,” according to the CFTC.

The order finds that JPMorgan’s illegal trading “significantly benefited” the bank while it “harmed other market participants.”

In an accompanying statement, CFTC commissioner Dan Berkovitz said that he opposed his agency’s ruling that JPMorgan’s actions “should not result in any disqualifications under the ‘bad actor’ provisions of the securities laws.”

Crucial Quote

“For eight years, a group of traders at JPMorgan systematically ‘spoofed’ precious metals and Treasury futures markets by entering hundreds of thousands of orders with the intent to cancel them before execution,” Berkovitz said. “The commission’s order

For years, JPMorgan traders initiated orders to buy or sell precious metals, Treasury notes and Treasury futures only to quickly cancel the trades before they were executed. The illegal practice sends a false signal to other market players, prompting price changes that the spoofers can then exploit.

According to the CFTC, traders at JPMorgan, in many instances, were successful in causing artificial price changes that were favorable to them.

“The conduct of the individuals referenced in today’s resolutions is unacceptable and they are no longer with the firm,” said Daniel Pinto, co-president of JPMorgan Chase and chief executive of its Corporate & Investment Bank. “We appreciate that the considerable resources we’ve dedicated to internal controls was recognized by the DOJ, including enhancements to compliance policies, surveillance systems and training programs.”

The efforts to distort the market lasted more than eight years, from at least 2008 to 2016, the government agencies said.

“Spoofing is illegal — pure and simple,” CFTC Chair Heath Tarbert said in a statement. “This record-setting enforcement action demonstrates the CFTC’s commitment to being tough on those who intentionally break our rules, no matter who they are.”

The settlement with the CFTC found that JPMorgan’s illegal trading “significantly benefited” the company while harming other market participants. JPMorgan, which admitted wrongdoing, is required to pay $920.2 million, including $311 million in restitution, $172 million in disgorgement and $436 million in civil monetary penalties, under the deal.

To resolve criminal charges tied to the unlawful trading in the precious metals markets and in Treasury futures, JPMorgan entered into a deferred prosecution agreement with the Justice Department. The bank is required to self-report violations of federal anti-fraud laws and cooperate in any future criminal investigations, U.S. Attorney John Durham of the District of Connecticut said in a statement.

In a parallel

The Daily Beast

Sole Witness Who Heard Cops Announce Themselves in Breonna Taylor Raid Changed His Story

This week, Kentucky Attorney General Daniel Cameron made the bombshell announcement that the cops who fatally shot Breonna Taylor would not be charged with killing her, calling their use of force in the March raid “justified to protect themselves.”In that justification, he said that one witness corroborated the three officers’ insistence that they knocked and identified themselves at Taylor’s Louisville home while executing a search warrant in connection with a narcotics investigation. It contradicted claims from Taylor’s boyfriend, Kenny Walker, and 11 other residents, who said they didn’t hear the cops announce themselves. Instead, Walker thought he was being burglarized and fired a warning shot that triggered a tragic chain of events.But, according to documents and audio obtained by VICE News on Saturday, that sole witness initially told investigators days after the March 13 raid that he didn’t actually hear officers Brett Hankison, Jonathan Mattingly, and Myles Cosgrove announce themselves.The witness—identified by VICE as Aarin Sarpee but by other outlets and public records as Aaron Julue Sarpee—was picking up his daughter from a unit above Taylor’s when the raid took place.It wasn’t until he was interviewed a second time, about two months after the raid by a sergeant in LMPD’s Public Integrity Unit, that Sarpee said he heard police say, “This is the cops.”Sarpee’s flip-flop, the latest twist in a case that has made Taylor an icon in the Black Lives Matter movement, calls into question the strength of Cameron’s case and the grand jury report, which state officials are demanding be made public.“I never had faith in Daniel Cameron to begin with, I knew he was too inexperienced with a job of this caliber. I knew he chose to be at the

GENEVA (Reuters) – Africa is losing nearly $89 billion a year in illicit financial flows such as tax evasion and theft, amounting to more than it receives in development aid, a U.N. study showed on Monday.

The estimate, in the United Nations Conference on Trade and Development’s (UNCTAD) 248-page report, is its most comprehensive to date for Africa. It shows an increasing trend over time and is higher than most previous estimates.

The report calls Africa a “net creditor to the world,” echoing economists’ observations that the aid-reliant continent is actually a net exporter of capital because of these trends.

“Illicit financial flows rob Africa and its people of their prospects, undermining transparency and accountability and eroding trust in African institutions,” said UNCTAD Secretary-General Mukhisa Kituyi.

Junior Davis, head of policy and research at UNCTAD’s Africa division, told Reuters the figure was likely an underestimate, citing data limitations.

Nearly half of the total annual figure of $88.6 billion is accounted for by the export of commodities such as gold, diamonds and platinum, the report said. For example, gold accounted for 77 percent of total underinvoiced exports worth $40 billion in 2015, it showed.

Understating a commodity’s true value helps conceal trade profits abroad and deprives developing countries of foreign exchange and erodes their tax base, UNCTAD said.

Tackling illicit flows is a priority for the United Nations, whose General Assembly adopted a resolution on this in 2018, and the report urges African countries to draw on the report to present “renewed arguments” in international forums.

(Reporting by Emma Farge; Editing by Steve Orlofsky)

Copyright 2020 Thomson Reuters.

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