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

JPMorgan


  • JPMorgan will pay the largest CFTC monetary penalty ever and admitted wrongdoing in order to resolve a case surrounding claims of market manipulation in the trading of precious metals and Treasury securities, Bloomberg first reported.
  • The case covers an eight-year period and relates to the practice of “spoofing,” where traders put in large orders to buy or sell a security with no intention of executing the order, creating the appearance of demand or supply for a particular asset.
  • JPMorgan will pay $920 million, which includes a $436.4 million fine, $311.7 million in restitution, and $172 million in disgorgement.
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JPMorgan will pay $920 million and admit wrongdoing in order to resolve a case surrounding claims of market manipulation, Bloomberg first reported on Tuesday.

The $920 million payment represents the largest-ever monetary penalty imposed by the Commodity Futures Trading Commission, and consists of a $436.4 million fine, $311.7 million in restitution, and $172 million in disgorgement, according to a statement from the CFTC seen by Bloomberg.

The case covers an eight-year period and relates to the practice of “spoofing,” where traders put in large orders to buy or sell a security with no intention of executing the order, creating the appearance of demand or supply for a particular asset, and helping move that asset in the desired direction of the trader.

It’s unlawful to submit and cancel orders in a strategy intended to deceive other traders.

The settlement will put an end to a criminal investigation of the bank that has entangled a half-dozen employees. Two employees have entered guilty pleas, while four employees are facing trial, according to Bloomberg.

JPMorgan traded down as much as 2% on Tuesday.

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