[NEW YORK] JPMorgan admitted wrongdoing and agreed to pay more than US$920 million to resolve US authorities' claims of market manipulation in the bank's trading of metals futures and Treasury securities over an eight-year period, the largest sanction ever tied to the illegal practice known as spoofing.
The New York-based lender will pay the biggest monetary penalty ever imposed by the CFTC, including a US$436.4 million fine, US$311.7 million in restitution and more than US$172 million in disgorgement, according to a statement from the Commodity Futures Trading Commission. The CFTC said its order will recognise and offset restitution and disgorgement payments made to the Department of Justice and Securities and Exchange Commission.
The accord ends a criminal investigation that has led to a half dozen employees being charged for allegedly rigging the price of gold and silver futures for more than eight years. Two have entered guilty plea, four others are awaiting trial.
The JPMorgan penalty far exceeds previous spoofing-related fines levied against banks, and is the toughest sanction imposed in the Justice Department's years-long crackdown on spoofing. The bank entered into a deferred prosecution agreement with the Justice Department as part of the settlement, according to the CFTC.
Spoofing typically involves flooding derivatives markets with orders that traders don't intend to execute to trick others into moving prices in a desired direction. The practice has become a focus for prosecutors and regulators in recent years after lawmakers specifically prohibited it in 2010. While submitting and canceling orders isn't illegal, it is unlawful as part of a strategy intended to dupe other traders.