REGULATION,SELL-SIDESeptember 30, 2020 12:11 PM GMT JP Morgan hit with record $920 million penalty after admitting eight-year spoofing scheme The US Department of Justice, CFTC, and SEC confirmed parallel actions against JP Morgan resulting in a record penalty for the years-long spoofing and manipulation activity. ByHayley McDowell US investment bank JP Morgan will pay a record $920 million after admitting its precious metals and US treasuries trading desks engaged in an unlawful spoofing scheme that spanned eight years. JP Morgan reached parallel agreements with the US Department of Justice, Commodity Futures and Trading Commission (CFTC), and the Securities and Exchange Commission (SEC) resulting in the record penalty for the illegal trading activity. An order from the CFTC stated that from 2008 through to 2016 numerous JP Morgan precious metals and treasuries traders, including heads of both desks, engaged in spoofing for hundreds of thousands of treasury notes, treasury bonds, and futures contracts. JP Morgan significantly benefitted from the spoofing – which occurs when traders bid and offer with the intent to cancel before execution – and harmed other market participants as the scheme caused false signals and artificial prices in the market, the regulator said. “Spoofing is illegal – pure and simple,” added CFTC chairman Heath 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.” JP Morgan also misled the CFTC’s division of enforcement’s spoofing task force in the early stages of its investigation, the watchdog stated, due to the bank’s response to requests for certain information. Although it noted JP Morgan’s cooperation in the later stages of its inquiry. Elsewhere, US securities watchdog SEC stated that between April 2015 and January 2016, traders on the US treasuries trading desk engaged in similar manipulative trading strategies to create false buy and sell interests in the market. JP Morgan will pay disgorgement of $10 million and a penalty of $25 million related to settle the SEC’s action. In response to the charges, JP Morgan said in a statement that it has entered into a three-year deferred prosecution agreement with the Department of Justice. The bank added it does not expect any disruption of service to clients due to the resolutions. “The conduct of the individuals referenced in today’s resolutions is unacceptable and they are no longer with the firm,” said Daniel Pinto, co-president at JP Morgan and CEO of the corporate & investment bank, responding to the regulatory action. “We appreciate that the considerable resources we’ve dedicated to internal controls were recognised by the Department of Justice, including enhancements to compliance policies, surveillance systems, and training programs.” Tagged:CFTC,JP Morgan,SEC,Spoofing,US Department of Justice https://www.thetradenews.com/jp-mor...y-after-admitting-eight-year-spoofing-scheme/
Since the 2010 “flash crash” the CME has been fairly relentless about spoofing. Individuals, Prop Firms, and Big Banks have all gotten popped. Which is good, because Bot games definitely undermine the integrity of the market.
A drop in the bucket. Its like all those manufacturers that put out products knowing a recall is there in the future. Cheaper to pay for the recall than it is to stall production. In JPs case, make more money spoofing than the fine will ever be.
I wonder if they will be fined again, for the spoofing activities from 2016 until now, which won't be uncovered for a few years. And I wonder if after this fine, they will just continue on spoofing, because with no criminal culpability, the traders know all that will happen to them is they get terminated. They'll just move on to the next firm.
If by this definition order cancellation is considered spoofing, then we are all spoofers unless it's all about the size.
No, that’s not the case. Two other big banks have been fined, and part of the deferred prosecution plea agreement is if they do it again they’ll be suspended from the CME. Which would be a disaster for not only JPM prop trading, but for all of their brokerage customers. And their prime brokerage business is worth Billions in revenue. And prime brokerage is one of the few notable growth areas for Investment Banking.
So instead they said to themselves "we will do it until we get caught and then go legit." Like a good Mob family. My point was, they cant claim ignorance.