JPMorgan Chase & Co. (NYSE:JPM) is staring at a record fine on claims its traders engaged in an illegal trading strategy all in the effort of misleading market participants. According to people with knowledge of the matter, the nation’s largest financial institution has agreed to pay $1 billion to settle claims its traders manipulated the metals futures and treasury markets.
JPMorgan Record Fine
The $1 billion fine would surpass previous spoofing fines but in line with market manipulation sanctions. While the financial institution was forced into admitting wrongdoing, it is unlikely the settlement deal will result in business restrictions in other areas of the firm. The settlement is expected to end years of investigations by the Department of Justice and the Securities and Exchange Commission.
JPMorgan found itself in trouble with regulators on its traders allegedly placing many orders in the metal futures and treasury market that they did not intend to execute. The orders were placed to mislead other market participants and steer price in a direction the bank would profit.
JPMorgan Spoofing Charges
Criminal charges leveled by the Justice Department, allege JPMorgan employees in the precious metal desk turned the venture of placing many market orders into an enterprise in a bid to spoof the market. While the act of placing many orders is not illegal, regulators outlawed the practice in 2010 as banks were using the strategy to mislead market participants.
Christina Trunz and John Edmonds, former JPMorgan traders, have already pleaded guilty for placing thousands of false orders all in the effort of manipulating precious metal prices between 2007 and 2016. Michael Nowak, the head of the metals trading desk and other traders are facing federal racketeering charges for running a massive multiyear scheme to manipulate the metals market.
JPMorgan is not the first bank to find itself in trouble over what regulators term market manipulation trading strategies.
Deutsche Bank AG (NYSE: DB), UBS Group AG (NYSE: UBS), and HSBC Holdings plc (NYSE: HSBC) are the other high profile banking institutions that have also paid a hefty price for engraining in spoofing.
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