Sep 29, 2020 - Economy

JPMorgan pays record $920 million fine for rigging commodity markets

Two people walking outside JPMorgan Chase & Co. building on Park Avenue in New York City.

Photo: Michael Brochstein/SOPA Images/LightRocket via Getty Images

JPMorgan will pay $920 million to settle charges that its commodity trading desk manipulated the market, allowing the bank to rake in millions of dollars in profits, the government alleged.

Why it matters: It's the largest fine ever imposed for a "spoofing" case — and a milestone for government efforts to clamp down on the trading tactic criminalized after the financial crisis.

What they're saying: JPMorgan's "illegal trading significantly benefited JPM and harmed other market participants," the Commodity Futures Trading Commission, a key regulator, said in a release announcing the penalty.

Details: The case alleged JPMorgan trading desks placed hundreds of thousands of orders for trades they intended to cancel. The orders flooded the silver, gold and other metals and treasuries markets and manipulated prices in a way that would later benefit the bank. This is known as spoofing.

  • JPMorgan admitted to wrongdoing, though no restrictions were placed on the bank for the misconduct.
  • Three agencies — the Justice Department, the Securities & Exchange Commission and the Commodity Futures Trading Commission — were involved in the probes.

Flashback: Prosecutors charged former JPMorgan traders one year ago for "widespread spoofing" that spanned nearly a decade.

  • Two traders have already pleaded guilty, while four others are fighting the charges.
  • In 2015, JPMorgan settled with the DOJ and Federal Reserve and paid a $550 million fine for its role in manipulating the foreign exchange markets.
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