JP Morgan Chase to Pay $920 million for Spoofing

JP Morgan Chase to Pay $920 million for Spoofing

30th September, 2020

JP Morgan Chase, the largest bank in the United States of America agreed to pay a record $920 million to settle charges against them for illegal trade practices in futures of gold and silver.

They were involved in deceptive conduct for a period of almost eight years, that included hundreds of thousands of spoof trades. In a statement JP Morgan said that the violations took place between 2008 and 2016 and emphasized that those traders no longer work for the company.

What is spoofing?

Spoofing is an illegal form of market manipulation in which a trader places a large order to buy or sell a financial asset like stocks, bonds or futures contract with the purpose of creating the impression of interest in the asset, thus driving up its price. However, the trader has no intention of actually executing the trade and instead places thousands of much smaller trades that profit on the higher price and then cancels the larger order.

This is the biggest monetary penalty ever imposed by the Commodity Futures Trading Commission (CFTC), which includes $436.4 million fine, $311,7 million in restitution and about $172 million in disgorgement, according to a CFTC statement. This penalty far exceeds previous spoofing related fines and is the toughest sanction imposed in the Justice Department's years long crackdown on spoofing.

This is not the first time JP Morgan has faced charges, in 2015 the bank pleaded guilty admitting to rig the U.S dollar and euros. The Justice Department said it took the previous plea into account in determining penalties.