Chase Reaches $920 Million Settlement for Trading Misconduct

JPMorgan Chase, the largest bank in the United States, agreed today to a record $920 million settlement over charges that it engaged in manipulative trades of futures tied to precious metals and Treasury bonds. This follows an 8 year investigation, from at least 2008 through 2016.

The Commodity Futures Trading Commission said in a statement that “JPM’s illegal trading significantly benefited JPM and harmed other market participants.” JPM is required to pay a total of $920.2 million, the largest amount of monetary relief ever imposed by the CFTC.

“Spoofing is illegal—pure and simple,” said CFTC Chairman Heath P. Tarbert. “This record-setting enforcement action demonstrates the CFTC’s commitment to being tough on those who intentionally break our rules, no matter who they are. Attempts to manipulate our markets won’t 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.”

Spoofing is an illegal form of market manipulation in which a trader places a large order to buy or sell a financial asset, such as a stock, bond or futures contract, with no intention of actually executing the order. Spoofing can manipulate markets by indicating an artificial impression of high demand for the asset.

The Department of Justice’s Fraud Section and the United States Attorney’s Office for the District of Connecticut announced entry of a Deferred Prosecution Agreement (DPA) with JPMC & Co., deferring criminal prosecution of JPMC & Co. on charges of wire fraud. Under the terms of the DPA, JPMC & Co. has agreed, among other things, to pay a criminal fine, disgorgement, and restitution.

The order notes that during the early stages of the Division of Enforcement’s investigation, JPM responded to certain information requests in a manner that resulted in the Division being misled. The order recognizes, however, JPM’s significant cooperation in the later stages of the investigation.