CFTC Fines JPMorgan $920 Million for Spoofing and Manipulation

CFTC has fined JPMorgan Chase $920 million over its role in the alleged manipulation of global markets for metals and Treasurys.

September 29, 2020 | AtoZ Markets – JPMorgan is set to pay a record $920 million to resolve probes from three federal agencies over its role in the alleged manipulation of global markets for metals and Treasurys.

The figure was released Tuesday by the Commodity Futures Trading Commission (CFTC) in a statement from Commissioner Dan Berkovitz. Last week, news reports indicated that the New York-based bank was nearing a settlement of almost $1 billion.

CFTC fines JPMorgan for spoofing

The penalty is a record for spoofing, which is when sophisticated traders flood markets with orders that they have no intention of actually executing. The practice was banned after the 2008 financial crisis and regulators have made it a priority to stamp out.

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In a statement, Berkovitz said he opposed the ruling from his agency that JPMorgan’s actions “should not result in any disqualifications under the ‘bad actor’ provisions of the securities laws.” He is apparently referring to the fact that the settlement isn’t expected to result in business restrictions on other areas of the firm.

“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 finds that JPMorgan manipulated these markets and failed to diligently supervise its traders.”

The bank also has quietly settled a long-running lawsuit that accused the bank of manipulating precious metals markets with “spoofing” trades. The lawsuit was filed in 2015 by Daniel Shak, the hedge fund operator and high-stakes poker player, and two metals traders, Mark Grumet and Thomas Wacker.

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The three plaintiffs had accused J. P. Morgan of manipulating the silver futures market from 2010 through 2011 through spoofing trades. JPMorgan traded down as much as 2% on Tuesday.

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