JPMorgan to pay a record $1 billion to settle market-manipulation charges, report says

  • JPMorgan is set to pay almost $1 billion in settlement fines as US regulators probe the bank for spoofing in precious metals and Treasury markets, Bloomberg reported Wednesday.
  • The payment would resolve probes by the Justice Department, the Commodities Futures Trading Commission, and the Securities and Exchange Commission.
  • The nearly $1 billion sum would be a record for alleged spoofing and more closely resemble past penalties for other forms of market manipulation.
  • Spoofing involves making several orders in a market without the intention of filling them. The practice is most often used to mislead other traders into pushing prices in a certain direction.
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JPMorgan is set to pay nearly $1 billion to settle with US authorities probing the bank for allegedly manipulating the metals and Treasurys markets, Bloomberg reported on Wednesday.

The sum would set a record for spoofing-related settlements and could be announced as soon as this week, sources familiar with the matter told Bloomberg. The payment would be more in-line with past sanctions for market manipulation but surpass previous spoofing fines.

The payment of the fine would resolve investigations by the Justice Department, the Commodity Futures Trading Commission, and the Securities and Exchange Commission, according to the report. The agencies have been looking into whether traders on JPMorgan’s metals futures and Treasurys desks interfered with the respective markets.

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Spoofing is a form of market manipulation that typically involves traders making a large sum of orders they have no intention of executing. Such actions can mislead market participants to steer prices in a certain direction. Though the underlying act of making several trades isn’t illegal, regulators outlawed the strategic use of such trades in 2010 through the Dodd-Frank Act.

One source told Bloomberg the settlement isn’t likely to restrict JPMorgan’s business practices, and that the bank will admit to wrongdoing.

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The pending case comes after criminal charges against JPMorgan were filed last year. The Justice Department alleged employees on the bank’s precious metals desk turned the venture into an enterprise frequently conducting illegal market activity.

JPMorgan learned of a separate investigation into its Treasurys desk after Michael Nowak, the former head of its precious metals desk, faced charges, Bloomberg reported.

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