JP Morgan reached parallel agreements with the US Department of Justice, Commodity Futures and Trading Commission (CFTC), and the Securities and Exchange Commission (SEC) resulting in the record penalty for the illegal trading activity.

An order from the CFTC stated that from 2008 through to 2016 numerous JP Morgan precious metals and treasuries traders, including heads of both desks, engaged in spoofing for hundreds of thousands of treasury notes, treasury bonds, and futures contracts.

JP Morgan significantly benefitted from the spoofing – which occurs when traders bid and offer with the intent to cancel before execution – and harmed other market participants as the scheme caused false signals and artificial prices in the market, the regulator said.

“Spoofing is illegal – pure and simple,” added CFTC chairman Heath 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.”

JP Morgan also misled the CFTC’s division of enforcement’s spoofing task force in the early stages of its investigation, the watchdog stated, due to the bank’s response to requests for certain information. Although it noted JP Morgan’s cooperation in the later stages of its inquiry.

Elsewhere, US securities watchdog SEC stated that between April 2015 and January 2016, traders on the US treasuries trading desk engaged in similar manipulative trading strategies to create false buy and sell interests in the market. JP Morgan will pay disgorgement of $10 million and a penalty of $25 million related to settle the SEC’s action.

In response to the charges, JP Morgan said in a statement that it has entered into a three-year deferred prosecution agreement with the Department of Justice. The bank added it does not expect any disruption of service to clients due to the resolutions.

“The conduct of the individuals referenced in today’s resolutions is unacceptable and they are no longer with the firm,” said Daniel Pinto, co-president at JP Morgan and CEO of the corporate & investment bank, responding to the regulatory action. “We appreciate that the considerable resources we’ve dedicated to internal controls were recognised by the Department of Justice, including enhancements to compliance policies, surveillance systems, and training programs.”

The post JP Morgan hit with record $920 million penalty after admitting eight-year spoofing scheme appeared first on The TRADE.

The global commodities trading arm of Merrill Lynch agreed to pay the fine to resolve the US Department of Justice’s investigation into the scheme which saw the firm’s metals traders deceive market participants by placing fraudulent orders for futures contracts.

Merrill Lynch Commodities admitted that from at least 2008 until 2014, its precious metals traders placed orders for futures with intentions to cancel before execution, in a bid to create a false impression of increased supply and demand and manipulate the market.

Thousands of spoofed orders were placed on the Commodity Exchange (COMEX) by Merrill Lynch traders during the six-year period, according to the US Department of Justice.  

The Commodities Futures Trading Commission (CFTC) announced a separate settlement with Merrill Lynch Commodities related to the same spoofing scheme, under which the firm will pay a penalty of $11.5 million. The regulator stated that the illegal activities and attempts to manipulate the precious metals futures market did in fact cause artificial prices.

“Today’s enforcement action shows that the Commission continues to aggressively pursue those who manipulate and spoof in our markets,” said James McDonald, the director of enforcement at the CFTC. “If left unchecked, this sort of misconduct can undermine the integrity of the price discovery process, harm law-abiding market participants, and diminish confidence in our markets more generally. That’s why we will continue to keep our markets free from spoofing and manipulation.”

As part of the investigation, the Department of Justice said that it also obtained an indictment against Edward Bases and John Pacilio, two former precious metals traders at Merrill Lynch Commodities, and charges related to their involvement in the spoofing scheme are pending.

The post Merrill Lynch fined $25 million for multi-year spoofing scheme appeared first on The TRADE.

The US Department of Justice convicted Matthew Connelly, former director of the pool trading desk in New York, with one count of conspiracy and two counts of wire fraud, while  former trader, Gavin Campbell Black, was convicted of one count of conspiracy and one count of wire fraud.   

A sentencing date has not yet been set following the month-long trial.

Evidence presented at the trial alleged that Connolly, who oversaw the desk which traded USD Libor derivatives, told traders to ask Deutsche Bank’s Libor submitters to submit false and fraudulent Libor contributions to benefit the team’s interests.

Black also asked cash traders who were responsible for submitting Deutsche Bank’s Libor rates to adjust their submissions to favour his trading positions. Several Deutsche Bank Libor submitters agreed to their requests to manipulate the benchmark, according to the US Department of Justice.

“Matthew Connolly and Gavin Black undermined the integrity of our financial markets by manipulating LIBOR, which is widely considered to be the most important number in the financial world because of its impact on trillions of dollars in financial products,” said assistant attorney General Benczkowski. 

“The Justice Department and its law enforcement partners will aggressively investigate and prosecute individuals and financial institutions who engage in this sort of misconduct.”

Deutsche Bank entered into a deferred prosecution agreement to resolve the wire fraud and antitrust charges in April 2015, after pleading guilty to one count of wire fraud and agreeing to pay a $775 million fine.

“Such conduct will not be tolerated by this administration, especially when it threatens to destabilize global markets and financial stability worldwide.  This case is a compelling example of effective coordination among law enforcement agencies — both at home and abroad,” added assistant attorney General Delrahim.

The post Former Deutsche Bank traders convicted for Libor rigging scheme appeared first on The TRADE.

The Swiss investment bank admitted that between 2007 and 2013, senior managers within its Asia-Pacific business looked to hire, promote and retain employees referred by government officials and executives of clients that were state-owned entities.

Known within the bank as ‘relationship or referral hires’, the candidates were often less qualified than others, less vetted and given benefits through their course of employment. Bankers within other subsidiaries at the institution, according to Credit Suisse’s admissions, were aware of the scheme and helped to hire the candidates.

The bank has agreed to pay the Securities and Exchange Commission (SEC) $30 million, and the US Department of Justice $46 million, as part of a non-prosecution agreement to resolve the matter with both authorities.

“In the banking industry, not every undertaking is fair game,” said assistant director-in-charge at the US Department of Justice, William Sweeney. 

“Trading employment opportunities for less-than-qualified individuals in exchange for lucrative business deals is an example of nepotism at its finest. The criminal penalty imposed today provides explicit insight into the level of corruption that took place at the hands of Credit Suisse Group AG’s Hong Kong-based subsidiary.”

Similar allegations hit JP Morgan in November 2016, after the US investment bank was found to have systematically handed out jobs and internships to government officials or clients. Roughly 100 interns and full-time employees were hired at the request of foreign government officials, enabling JP Morgan to win or retain business.

JP Morgan agreed settle the charges and pay the Federal Reserve Board of Governors $61.9 million, the Justice Department $72 million and the SEC $130 million, bringing its total penalty to $264 million.

“Bribery can take many forms, including granting employment to friends and relatives of government officials,” Charles Cain, the SEC’s chief of enforcement for foreign corrupt practice, concluded. “Credit Suisse’s practice of engaging in these hiring practices violated the law, and it is now being held to account for having done so.”

The post Credit Suisse fined $77 million for corrupt hiring scheme appeared first on The TRADE.