#JPMorgan settles market manipulation probe for $920 million

JPMorgan Chase agreed to pay more than $920 million to settle market manipulation investigations into its trading of metals futures and Treasury securities, the US regulator for derivatives markets said Tuesday.

The settlement draws a line under a multi-year probe into the country’s largest lender and marks a major scalp for US authorities.

The lender will pay the biggest monetary penalty ever imposed by the Commodity Futures Trading Commission (CFTC), including $436.4 million in fine, $311.7 million in restitution and more than $172 million in disgorgement, the statement said.

Disgorgement is a form of restitution that requires companies to return money that has been obtained from a fraudulent scheme.

“Spoofing is illegal — pure and simple. 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,” said CFTC Chairman Heath Tarbert.

Spoofing is a practice in which traders place orders they intend to cancel to move prices to benefit their market positions.

“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 of JPMorgan and CEO of the Corporate & Investment Bank.

“We appreciate that the considerable resources we’ve dedicated to internal controls was recognized by the DOJ, including enhancements to compliance policies, surveillance systems and training programs.”

Meanwhile, the Securities and Exchange Commission said the lender would pay $35 million in fines and disgorgement in relation to the CFTC probe into manipulative trading practices in Treasuries and Treasury securities between 2009 and 2016.

“Traders placed numerous non-bona fide orders on one side of the market for a particular Treasury instrument – i.e., orders they never intended to execute – in order to create a false impression of buy or sell interest in that instrument that would raise or depress prices,” the securities regulator said in a filing on Tuesday.