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JPMorgan fined record $1.3b, admits misconduct over market manipulation

JPMorgan Chase & Co. admitted wrongdoing and agreed to pay more than $US920 million ($1.29 billion) 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 $US436.4 million fine, $US311.7 million in restitution and more than $US172 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.

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.

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.Credit:AP

The accord ends a criminal investigation of the bank 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 pleas, and 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.

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