Chase & Co. has agreed to pay $ 920 million and admits misconduct related to manipulating precious metals and Treasury markets, regulators said Tuesday.
The deal resolves investigations by the Department of Justice, the Commodity Futures Trading Commission and the Securities and Exchange Commission, according to a CFTC statement. The fine is the largest ever imposed for spoofing, a type of market manipulation, by the CFTC, the agency said.
Agency announcements confirm the news of the fine reported for the first time last week. The claims include allegations that JPMorgan traders manipulated Treasuries from 201
The Justice Department said JPMorgan has accepted a deferred power of attorney agreement through which the bank admitted to having committed wrongdoing on its precious metals and Treasury trading desks. The deal suspends a criminal case against the bank on two grounds of bank fraud and requires JPMorgan to cooperate with related investigations and continue to improve its compliance and oversight programs.
The SEC investigation involved spoofing treasury bills and banknotes. Spoofers quickly enter and cancel large orders in an attempt to fool others on supply and demand. The tactic can move prices in a direction favored by the spoofer.
The SEC said the conduct ended in January 2016, after “some staff changes” were made at the counter that traded Treasury securities.
“The conduct of the people referred to in today’s resolutions is unacceptable and they are no longer part of the company,” said Daniel Pinto, co-chair of JPMorgan Chase and CEO of Corporate & Investment Bank. “We appreciate that the considerable resources we have dedicated to internal controls have been recognized by the DOJ, including improvements to compliance policies, surveillance systems and training programs.”
The spoofing lasted at least eight years and involved hundreds of thousands of misleading orders for precious metals and US Treasury futures contracts, the CFTC said. The total fine includes a $ 437 million penalty, $ 311 million restitution, and $ 172 million disgorgement, the CFTC said. Disgorgement is the obligation to return illegally earned profits.
“Spoofing is illegal, plain and simple,” CFTC President Heath Tarbert said. “This record-breaking executive action demonstrates the CFTC’s commitment to being tough on those who intentionally break our rules, no matter who they are.”
Four former JPMorgan dealers were criminally charged last year with crimes related to spoofing, including racketeering, a crime that is most typically found in cases against organized crime entities. The traders have pleaded not guilty and are fighting the charges. Two other former JPMorgan traders pleaded guilty in 2018 and 2019 to crimes related to spoofing precious metals futures.
In total, the Justice Department has accused 20 people of spoofing-related crimes since 2015. Banks and other financial institutions have collectively paid over $ 1 billion in fines related to civil and criminal spoofing investigations.
Last week, two traders who previously worked at
German bank AG
they were convicted by the Chicago federal court for computer fraud linked to spoofing charges. The traders were acquitted for a single act of conspiracy.
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