CFTC Orders JPMorgan to Pay Record $920 Million for Spoofing and Manipulation

[TravelMug]

CFTC Orders JPMorgan to Pay Record $920 Million for Spoofing and Manipulation

September 29, 2020

Washington, D.C. — The Commodity Futures Trading Commission today issued an order filing and settling charges against JPMorgan Chase & Company (JPMC & Co.) and its subsidiaries, JPMorgan Chase Bank, N.A., and J.P. Morgan Securities LLC (JPMS) (collectively, JPM), for manipulative and deceptive conduct and spoofing that spanned at least eight years and involved hundreds of thousands of spoof orders in precious metals and U.S. Treasury futures contracts on the Commodity Exchange, Inc., the New York Mercantile Exchange, and the Chicago Board of Trade. This case is brought in connection with the Division of Enforcement’s Spoofing Task Force.                   

The order finds that JPM’s illegal trading significantly benefited JPM and harmed other market participants. JPM is required to pay a total of $920.2 million—the largest amount of monetary relief ever imposed by the CFTC—including the highest restitution ($311,737,008), disgorgement ($172,034,790), and civil monetary penalty ($436,431,811) amounts in any spoofing case.

https://www.cftc.gov/PressRoom/PressReleases/8260-20

So it's a record fine, almost $1 billion, and the irony is that no one goes to jail so this is still a good sweat deal for this criminals, not even a slap on the wrist. And I doubt that it put a dent on them. As if nothing happens, the usual banking day for JP Morgan.

[exstasie]

They manipulated multiple markets on the 3 biggest commodity exchanges for "at least" eight years. How did the CFTC determine they profited only $172 hundred million (the disgorgement amount)? Something tells me they made a lot more than that over that period of time.

This ~$1 billion fine is a drop in the bucket and feels like a slap on the wrist, despite the initial shock value of the headline.

[amishmanish]

Talk about the whales manipulating the market in cryptocurrecnies. Such a simple strategy on top of that. Like the article quotes:

---with the intent to cancel those orders prior to execution. Through these spoof orders, the traders intentionally sent false signals of supply or demand designed to deceive market participants into executing against other orders they wanted filled.

So they place buy orders to ramp up the prices causing smaller investors to FOMO. Later they cancel their own sell orders which i presume would be big enough so they cannot be fulfilled instantly. I guess the actual execution would be a lot more complicated and done in real time.

Here in India, it is a dream for a lot of talented people to join one of these elite American invetment banks. The profile of a "Trader" is generally reserved for the best and brightest of Math geeks. It is so shameful that all this talent ends up in these banks where they use questionable methods to enrich the bank and themselves by fundamentally cheating other market participants. On top of that, these are considered top-class jobs and these people are held in high regard wherever they go.

[btc_angela]

^^amishmanish, similar to our country, he held bankers with high regards, but that was like in the 80's-90's. Yes because you are privilege and because of good money you are making. But that's old and traditional though.

Anyhow, yes, this is just a slap on the wrist, it could have been a record fine, but it doesn't take away that these bankers have been doing this under the CFTC's nose and what they do? flex their muscle and then almost $1 B fine. This won't affect JPMorgan and I wouldn't be surprise if they are going to create ways to circumvent again and it will take years before CFTC discover it or at least make an investigations.

[Lucius]

So it's a record fine, almost $1 billion, and the irony is that no one goes to jail so this is still a good sweat deal for this criminals, not even a slap on the wrist. And I doubt that it put a dent on them. As if nothing happens, the usual banking day for JP Morgan.

This is far from the record in the penalty that occurred in 2012 when HSBC paid $1.92 billion, but all of this together is only a small part of what they actually earned through their illegal activities. If we take into account that they (the bankers) are at the top of the pyramid, then we should not be surprised that they have made laws for themselves in which they are not the same as other ordinary people. I call them criminals in white gloves and expensive suits, nothing more than that.

In 2012, HSBC was the subject of hearings of the U.S. Senate permanent subcommittee for investigations for severe deficiencies in its anti-money laundering practices (see Controversies). On 16 July the committee presented its findings. Among other things, it concluded that HSBC had been transferring $7 billion in banknotes from its Mexican to its US subsidiary (much of it related to drug dealing), was disregarding terrorist financing links and was actively circumventing US safeguards to block transactions involving terrorists, drug lords and rogue regimes, including hiding $19.4 billion in transactions with Iran. This investigation followed on from a probe by the US Federal Reserve and Office of the Comptroller of the Currency found that there was "significant potential for unreported money laundering or terrorist financing".

On 11 December 2012, HSBC agreed to pay a record $1.92 billion fine in this money laundering case. "Bank officials repeatedly ignored internal warnings that HSBC's monitoring systems were inadequate, the Justice Department said. In 2008, for example, the CEO of HSBC Mexico was told that Mexican law enforcement had a recording of a Mexican drug lord saying that HSBC Mexico was the place to launder money." The United States Department of Justice, however, decided not to pursue criminal penalties, a decision which the New York Times labelled a "dark day for the rule of law." HSBC chief executive Stuart Gulliver said: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again."

[Broly46]

Paying fines make them more susceptible to illegal practices. I’m wondering spoofing username is part of the video games memes, and it has become a financial terms, what a breaking news. Spoofing buy and sell walls.

[7788bitcoin]

CFTC Orders JPMorgan to Pay Record $920 Million for Spoofing and Manipulation

They might not be the only corporate spoofing and manipulating the market, i wish this is just a start and if they are manipulating a regulated market i wonder what kind of manipulation they do in the cryptocurrency market where there is no regulation.

 

So it's a record fine, almost $1 billion, and the irony is that no one goes to jail so this is still a good sweat deal for this criminals, not even a slap on the wrist. And I doubt that it put a dent on them. As if nothing happens, the usual banking day for JP Morgan.

How much money they made doing these illegal activities and there is no clarity regarding that, they are just slapped a fine and no one goes to jail and that is the case with every other multinational companies who are doing these illegal activities and they continue to do that because they very well know that apart from the fines they will not face any other legal consequences.

[Kemarit]

Regardless of the amount, most probably JPMorgan hot shots are just laughing their ass off to the decision imposed on them. We can say that this is just a trivial amount, and pretty sure they have earn double of triple that amount in that span of years of their illegal activities.

Yeah, we can brand them as white collar criminals, hiding in their corporate office, putting a plan on how to manipulate everything that no one will suspect or find out, just like ordinary criminals offline or online. Could be the start though, and we do hope that CTFC will investigate more on this white collar crooks criminal past.

[hugeblack]

They will find a way to avoid paying that amount or try to keep it as low as possible. It is the way the rich always do it, and tax evasion and manipulation are characteristic of the rich.
As for going to prison, the United States grants many immunities to the owners of companies, especially if they are well-established financial institutions.
As for plagiarism in the digital currency market, it exists, and the reason is the weakness of legislative laws.

[Jating]

Perhaps the answer as to why there are no bankers in jail is that they aren't prosecuted and a deal is being made under the table. Just like in this case, almost $1 billion is fair enough for this government's prosecutors. Or probably this kind of manipulation is sophisticated in itself, that it is hard to established the facts in the beginning.

We all know what manipulation and deceptive conduct and spoofing, but do we really know the intricacies of it that it took many years for CFTC to just file a settling charges against JPMorgan. Perhaps we really need to see another dire effect of this kind of manipulations like financial crisis that CFTC or whoever agencies it is to have someone put to jail for bringing a disaster. So there some weaknesses to the legislative law that it is hard to draw the line between right and wrong.

[NotATether]

The only case I've seen banking and other corporate heads get jailed is when they try to conceal their companies' insolvency with bogus accouning records, i.e. accounting fraud. I think this is because it can easily be shown that investors of the company are harmed when the insolvency is exposed, while it's more difficult to demonstrate that market manipulation hurt investors, primarily because in financial markets there is no direct business relationship between the manipulating companies and the traders.

[fiulpro]

Most companies like JP Morgan do use underhanded methods to manipulate the market and honestly this time they got caught but most of the times they use pawns, pay them healthy sum to keep quiet and at the same time get their jobs done. I started doing job for a very well reputed company here and got to know tons of things about how corrupt they are , but as a general public there is nothing that I can do because even the police and the government are corrupted.

US$2.687 trillion

What they are supposed to pay , they for sure earned more by manipulating!!!
The system is only cruel for the general public, I remember a man who was in jail for stealing hedge clippers https://www.nbcnews.com/news/nbcblk/black-man-sentenced-life-after-stealing-hedge-clippers-gets-possible-n1236759 it was back before 2000 but corruption haven't budged a lot from that time.

[STT]

Theres more then a few cases like that, there is a famous case of total life imprisonment for a 3 pack of cotton socks being stolen and many others similar.   One man found in a prison had never been charged, just kept in solitary confinement after being caught drunk and left in the cell for years apparently with mental disorder problems he was never able to gain help until someone discovered the long term prisoner without any criminal record.   The reason this occurs and many other corrupt practices is the government is subsidizing non profitable business, they are looking to collect prisoners to retain because each is chargeable at 50k a year and its an easily profitable avenue to just keep raising prison population and so revenue.
  JPM was similarly just distorting markets using easy money provided freely by a centralized monetary system, being dishonest and increasing their advantage over normal participants just meant they got carried away.   No punishment will be too harsh for JPM or any bank because they are backing the government in its debt as primary dealers, if they had been disbarred as a primary dealer for corruption it would forever have burnt their hands for their dishonesty and be remembered but it wont happen as per any corruption backed by government fiscal practice.

[The Sceptical Chymist]

How did the CFTC determine they profited only $172 hundred million (the disgorgement amount)? Something tells me they made a lot more than that over that period of time.

Yeah, that figure does seem very low given that the "spoofing" was done over a number of years.

So precious metals were being manipulated after all--I called people crazy conspiracy theorists whenever I'd hear them complaining about vague manipulation, but I'll be damned if it wasn't true all along.  And I'm fairly certain that JPM wasn't the only big financial institution engaged in that sort of chicanery.  What motherfuckers they and their ilk are.  Once upon a time, JP Morgan was one of the most respected and straight-dealing firms on Wall Street (in the early 20th century and earlier, at least).  Now they're as despicable as Goldman Sachs and the rest of them.

This ~$1 billion fine is a drop in the bucket and feels like a slap on the wrist, despite the initial shock value of the headline.

I'm not sure what a $1billion fine means to a business like JPM, but since all these investment banks, retail banks, the Fed, and the government are all in bed together you'd better believe they weren't going to be hit with a fine that could cripple them.  And of course nobody's going to jail.  That's American justice for you.

[bitgolden]

It is really nothing for a company like JPMorgan to pay 1 billion in fines, it is really not a big deal for them considering how much they make yearly and how much money they have as well.

By comparison JP Morgan makes about 100 billion in revenue every year, even more but I didn't want to put the change there.

So, losing just 1 billion is just change for them, nothing big deal. Obviously they would rather go without getting caught but not because they have to pay a penalty but because they probably wanted to continue and make more profit this way which they had to stop now that they got caught, that is only thing they are worried about.

At the end of the day if you do not put enough penalties that makes them really hurt, like 30-40 billion they will continue, otherwise 1 billion may sound a lot but it is nothing to them.

[exstasie]

How did the CFTC determine they profited only $172 hundred million (the disgorgement amount)? Something tells me they made a lot more than that over that period of time.

Yeah, that figure does seem very low given that the "spoofing" was done over a number of years.

So precious metals were being manipulated after all--I called people crazy conspiracy theorists whenever I'd hear them complaining about vague manipulation, but I'll be damned if it wasn't true all along.  And I'm fairly certain that JPM wasn't the only big financial institution engaged in that sort of chicanery.

I'd also be very surprised if spoofing encompassed the entirety of market manipulation. Probably just the tip of the iceberg, really. I wonder if we'll see any other precious metals manipulation cases emerge, or if this was just a token slap on the wrist.

[el kaka22]

The problem here is that JP Morgan makes hundreds of billions of dollars, Deutsche bank launders money, and basically all the bad things these places do and they get away with it, they pay a small fine (for them 1 billion is small) and they end up with doing the same thing over and over again.

I can do the crime myself as well, I can commit any crime and in return I would be put to jail, have you guys heard about what happened to bitmex? Owners are facing jail time right now because they didn't follow the rules of USA, which means we are talking about not powerful people doing the same thing and going to jail where as rich people getting away with it. This is like me making 50k dollars per year doing something illegal like selling drugs and then getting fined 500 dollars for it, you think that will stop me?

[exstasie]

The problem here is that JP Morgan makes hundreds of billions of dollars, Deutsche bank launders money, and basically all the bad things these places do and they get away with it, they pay a small fine (for them 1 billion is small) and they end up with doing the same thing over and over again.

The CFTC is just a civil agency so they don't pursue criminal charges. But sometimes they do joint investigations with the DOJ, who brings federal criminal charges and prison time. This is a case last year where criminal charges were brought against traders who worked at major US banks: https://www.cftc.gov/PressRoom/PressReleases/8013-19

In these cases though, they seem to let the banks themselves off scot-free.

I can do the crime myself as well, I can commit any crime and in return I would be put to jail, have you guys heard about what happened to bitmex? Owners are facing jail time right now because they didn't follow the rules of USA, which means we are talking about not powerful people doing the same thing and going to jail where as rich people getting away with it.

Wow, hadn't heard. Thanks for letting us know!

https://www.nytimes.com/2020/10/01/technology/bitmex-bitcoin-criminal-charges.html

American authorities brought criminal charges on Thursday against the owners of one of the world’s biggest cryptocurrency trading exchanges, BitMEX, accusing them of allowing the Hong Kong-based company to launder money and engage in other illegal transactions.

BitMEX is far from the first cryptocurrency company to be suspected of facilitating criminal activity. But it is the largest and most established exchange to face criminal charges.

Federal prosecutors in Manhattan indicted the chief executive of BitMEX, Arthur Hayes, and three co-owners: Benjamin Delo, Samuel Reed and Gregory Dwyer. Mr. Reed was arrested in Massachusetts on Thursday, while the other three men remained at large, authorities said.

One of the owners has already been arrested.....

[dothebeats]

I’m pretty sure JPMorgan did make a lot more than that fine, even though we consider that as ‘record-breaking’. Point of the matter is, no one ever pursues criminal charges or jail time for the hands who control the show. They are basically just asking for free lunch on the banking giant and subtly asks them to ‘not do it again’.  The head honchos of the bank must be pissed for the fine, but just accepts it and say to themselves that they’d just make even more than the fine.

[beerlover]

Most of the time when it comes to financial crimes there was nobody "hurt" in the physical sense, you didn't murder anyone, you didn't put anyone's life at risk, so there is rarely ever a jail time. Obviously there are people who put into a jail as well because we have heard of them or seen news about them so if you do a big enough crime in financial sector you could still go to jail, usually not the same jail as the other ones but it is still a jail nevertheless.

Finally, we are talking about money here and they should all go to jail if you ask me, when you steal money from other people in hundreds of millions even billions you should be put to jail but since it is the "company" that commits the crime, there is rarely just one person to put to jail.