It was announced on September 29 that JPMorgan Chase agreed to settle with U.S. authorities and will pay fines and penalties to the Commodities Futures Trading Commission and the Securities and Exchange Commission. JP Morgan Chase agreed to pay $920 million in fines and penalties for its illegal manipulation of markets for precious metals and U.S. Treasuries through the tactic known as “Spoofing.”
During an eight-year period, fifteen traders and two trading desks acted under the direction of JP Morgan Chase and used this “spoofing” tactic to send misleading trading signals into the market for silver, gold, and other precious metals, with no intention of buying or selling at the stated prices, to move the market to “more favorable prices than J.P. Morgan would have otherwise been able to obtain,” and then profit from the activation of the intended trade.
According to newly published documents from the Department of Justice, the unlawful trading in the futures market for precious metals involved a total of 10 traders and resulted in losses of $205 million, while five additional traders caused an another $106 million in losses by manipulating prices of contracts with the U.S. Treasury and also bonds and notes in the secondary market. In short, JP Morgan’s misconduct resulted in over $300 million in losses in these two markets.
According to a CFTC statement, JP Morgan Chase was sanctioned with a fine of $436.4 million, $311.7 million in restitution and over $172 million in disgorgement, totaling over $920 million. This is the largest sanction amount ever for spoofing. The firm will also enter into a three-year deferred prosecution agreement. The market losses of over $300 million has now been set aside for victims of this misconduct who can apply for relief through the government.
JP Morgan is one of over two dozen individuals and firms who have been sanctioned by the Justice Department or the CFTC, including trading shops, day traders, and big banks such as Deutsche Bank AG. and Bank of America Corp.