- JPMorgan It is expected to pay nearly $1 billion to settle US regulator claims for spoofing in the precious metals and Treasury markets. Bloomberg reported on Wednesday.
- This payment will resolve the investigation by the Department of Justice, Commodity Futures Trading Commission, and Securities and Exchange Commission.
- The nearly $1 billion amount would be a record spoofing agreement, more similar to past fines for other forms of market manipulation, Bloomberg said.
- Spoofing involves placing multiple orders on the market without the intention of filling the order, and often misleads other traders to push prices in a certain direction.
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This sum will set a record for spoofing-related agreements and could be released this week, sources familiar with the matter told Bloomberg. The payment is in line with other market manipulation sanctions, but outperforms previous spoofing fines.
According to the report, this payment will settle the investigation of the Ministry of Justice, Commodity Futures Trading Commission and Securities and Exchange Commission. The agency is investigating whether traders at JPMorgan’s Metals Futures and Treasury desk are disrupting each market.
Spoofing is a form of market manipulation where traders usually place a lot of orders that they do not intend to execute. It can be misleading for market participants to adjust prices in certain directions. While the underlying act of making multiple transactions is not illegal, regulators banned the strategic use of such transactions in 2010 through the Dodd-Frank Act.
One source told Bloomberg that the agreement is unlikely to limit JPMorgan’s business practices and that the bank will admit to illegal activity.
In a criminal accusation against JPMorgan filed last year, the Department of Justice alleged that employees at the bank’s precious metals desk turned their ventures into businesses that frequently conduct illegal market activities.
After prosecution was filed against Michael Nowak, the former head of the precious metal desk, JPMorgan became aware of a separate investigation into the Treasury desk, Bloomberg reported.
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