JPMorgan Looks To Settle Spoofing Allegations for $1B: FT

JPMorgan Chase & Co JPM is negotiating a settlement with authorities in the United States that would resolve allegations related to alleged manipulation of metals and Treasuries markets, the Financial Times reported Wednesday.

What Happened: The $1 billion settlement would bring to halt investigations being carried out by the Department of Justice, the Securities and Exchange Commission, and the Commodities Futures Trading Commission, according to FT.

Two former traders of the New York-based bank — Christian Trunz and John Edmonds — have reportedly pleaded guilty to manipulating prices of precious metals between 2007 and 2016.

Michael Nowak, the lender’s former head of metals trading, and two other former traders along with one ex-salesperson are facing federal racketeering charges.

The settlement is not likely to result in any restrictions on the bank’s trading or operations, people familiar with the matter told FT.

Why It Matters: The allegations against the bank relate to a practice called “spoofing”, for which criminal penalties were introduced under the Dodd-Frank regulations after the 2008 financial crisis, FT noted.

Deutsche Bank AG DB, UBS Group AG UBS, and HSBC Holdings Plc NYQ have been fined in previous instances for spoofing the precious metals markets. 

Suspicious Activity Reports filed with the United States Department of Treasury have recently shed light that many financial entities including JPMorgan could have assisted money launderers and criminals.

Over 2,100 such filings with the Financial Crimes Enforcement Network were shared with media outlets and span over $2 trillion worth of suspicious transactions.

Price Action: JPMorgan shares closed nearly 1.6% lower at $92.74 on Wednesday and fell almost 0.3% in the after-hours session.

Posted In: Market ManipulationThe Financial TimesU.S. Department of TreasuryU.S. Securities and Exchange CommissionGovernmentNewsRegulationsCommoditiesLegalMarketsMedia