CFTC orders JPMorgan to pay record USD920m for spoofing and manipulation

JPMorgan is to pay a record USD920.2 million, the largest amount of monetary relief ever imposed by the CFTC, to settle charges against JPMorgan Chase & Company (JPMC & Co.) and its subsidiaries, JPMorgan Chase Bank, and JPMorgan Securities (JPMS) (collectively, JPM), for manipulative and deceptive conduct and spoofing.

The payment includes the highest restitution (USD311,737,008), disgorgement (USD172,034,790), and civil monetary penalty (USD436,431,811) amounts in any spoofing case.

The charges cover a period of at least eight years and involved hundreds of thousands of spoof orders in precious metals and US Treasury futures contracts on the Commodity Exchange, the New York Mercantile Exchange, and the Chicago Board of Trade. The case was brought in connection with the Division of Enforcement’s Spoofing Task Force.                    

“Spoofing is illegal—pure and simple,” says CFTC Chairman Heath P 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.”

“This action sends the important message that if you engage in manipulative and deceptive trade practices you will be caught, punished, and forced to give up your ill-gotten gains,” added Division of Enforcement Director James McDonald. “The CFTC is committed to working with our law enforcement and regulatory partners to eradicate this unlawful activity and to hold those responsible fully accountable.”

In a parallel matter, the Department of Justice’s Fraud Section and the United States Attorney’s Office for the District of Connecticut today announced entry of a Deferred Prosecution Agreement (DPA) with JPMC & Co, deferring criminal prosecution of JPMC & Co on charges of wire fraud. Under the terms of the DPA, JPMC & Co has agreed, among other things, to pay a criminal fine, disgorgement, and restitution.

In another parallel matter, the Securities and Exchange Commission (SEC) has entered an order filing and settling charges against JPMS imposing both disgorgement and a civil monetary penalty. The CFTC order will recognise and offset any restitution and disgorgement payments made to the DOJ and the SEC.