JPMorgan Chase & Co., the largest bank in the United States, will be paying $920 million in a settlement after admitting wrongdoing in several market manipulations of trades of futures involving precious metals and treasury bonds.<\/p>\n
The US Commodity Futures Trading Commission, in a statement<\/a> Tuesday issued an order filing and settling charges against JPMorgan Chase & Company and its subsidiaries, JPMorgan Chase Bank, N.A., and J.P. Morgan Securities LLC for manipulative and deceptive conduct that spanned at least eight years.<\/p>\n The order finds that JPMorgan\u2019s illegal trading significantly benefited the bank and harmed other market participants.<\/p>\n The New York-headquartered bank is required to pay a total of $920.2 million\u2014the largest amount of monetary relief ever imposed by the CFTC\u2014including the highest restitution ($311,737,008), disgorgement ($172,034,790), and civil monetary penalty ($436,431,811) amounts in any spoofing case.<\/p>\n The case involved hundreds of thousands of fake orders in precious metals and U.S. Treasury futures contracts on the Commodity Exchange, Inc., the New York Mercantile Exchange, and the Chicago Board of Trade around 2008 to 2016. This case is brought in connection with the Division of Enforcement\u2019s Spoofing Task Force.<\/p>\n The bank has been accused of a manipulative practice called \u201cspoofing\u201d where traders would place orders on one side of the market which they never intended to execute, to create a false impression of buying or selling interest that would raise or depress prices, according to a Reuters report<\/a>.<\/p>\n \u201cSpoofing is illegal\u2014pure and simple,\u201d said CFTC Chairman Heath Tarbert.<\/p><\/blockquote>\n<\/blockquote>\n \u201cThis record-setting enforcement action demonstrates the CFTC\u2019s commitment to being tough on those who intentionally break our rules, no matter who they are. Attempts to manipulate our markets won\u2019t be tolerated. The CFTC will take all steps necessary to investigate and prosecute illegal activities that could ultimately undermine the integrity of the American free enterprise system,\u201d Tarbert said.<\/p>\n \u201cThis action sends the important message that if you engage in manipulative and deceptive trade practices you will be caught, punished, and forced to give up your ill-gotten gains,\u201d added CFTC Division of Enforcement Director James McDonald.<\/p>\n \u201cThe CFTC is committed to working with our law enforcement and regulatory partners to eradicate this unlawful activity and to hold those responsible fully accountable,\u201d he said.<\/p>\n The US Securities and Exchange Commission on September 29 issued an order filing and settling charges against JPMorgan imposing both disgorgement and a civil monetary penalty. The CFTC order, meanwhile, will recognize and offset any restitution and disgorgement payments made to the DOJ and the SEC.<\/p>\n The US SEC said in a separate press statement<\/a> that J.P. Morgan Securities admitted the findings in the SEC’s order and agreed to pay disgorgement of $10 million and a civil penalty of $25 million to settle the action.<\/p>\n The US Department of Justice\u2019s Fraud Section and the United States Attorney\u2019s Office for the District of Connecticut on Tuesday also announced the entry of a Deferred Prosecution Agreement with JPMorgan Chase & Co., deferring criminal prosecution of the bank on charges of wire fraud.<\/p>\n Under the terms of the DPA, JPMC & Co. has agreed, among other things, to pay a criminal fine, disgorgement, and restitution.<\/p>\n According to the SEC’s order, between April 2015 and January 2016, certain traders on J.P. Morgan Securities’ Treasuries trading desk employed manipulative trading strategies involving Treasury cash securities.<\/p>\n The SEC order finds that the traders placed bona fide orders to buy or sell a particular Treasury security, while nearly simultaneously placing non-bonafide orders, which the traders did not intend to execute, for the same series of Treasury security on the opposite side of the market.<\/p>\n The order also finds that the non-bonafide orders were intended to create a false appearance of buying or selling interest, which would induce other market participants to trade against the bona fide orders at prices that were more favorable to J.P. Morgan Securities than J.P. Morgan Securities otherwise, would have been able to obtain.<\/p>\n According to the order, after the traders secured beneficially priced executions for the bona fide orders, they promptly canceled the non-bonafide orders.<\/p>\n “J.P. Morgan Securities undermined the integrity of our markets with this scheme,” said Stephanie Avakian, Director of the SEC’s Division of Enforcement.<\/p><\/blockquote>\n<\/blockquote>\n “Their manipulative trading of Treasury cash securities created a false appearance of activity in the market and induced other market participants to trade at more favorable prices than J.P. Morgan Securities would have otherwise been able to obtain,” Avakian said.<\/p>\n The recent agreement, meanwhile, also takes into account JPMorgan’s cooperation with the probe and steps it has already taken such as hiring hundreds of new compliance officers, the Justice Department said.<\/p>\n JPMorgan Chase has since removed all employees involved in market manipulations of trades of futures involving precious metals and treasury bonds.<\/p>\n \u201cThe conduct of the individuals referenced in today\u2019s resolutions is unacceptable and they are no longer with the firm,\u201d said Daniel Pinto, co-President of JPMorgan Chase and CEO of the Corporate & Investment Bank.<\/p><\/blockquote>\n<\/blockquote>\n \u201cWe appreciate that the considerable resources we\u2019ve dedicated to internal controls were recognized by the DOJ, including enhancements to compliance policies, surveillance systems, and training programs,\u201d Pinto said in a statement<\/a>.<\/p>\n The firm also does not expect any disruption of service to clients as a result of the recent settlement which fully resolved investigations by the DOJ, CFTC, and SEC.<\/p>\n In Tuesday\u2019s afternoon trading, however, shares of JPMorgan fell 0.9% to $95.33 after the news of the settlement.<\/p>\n\n
What were the findings of the SEC on the JPMorgan case?<\/h2>\n
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Bank has parted ways with employees involved in the scheme<\/h2>\n
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