JPMorgan Chase will pay a record $920 million to resolve a criminal investigation by three federal agencies over its role in the alleged manipulation of precious-metal and Treasury markets, federal regulators said on Tuesday.
JPMorgan agreed to a settlement which resolves investigations by the Justice Department, Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
As part of the deal, the bank will admit to wrongdoing and pay a record fine of $920 million, according to a statement from the CFTC on Tuesday.
The fine is the largest ever imposed on a bank for spoofing, a type of market manipulation where traders flood markets with orders they don’t actually execute with the intention of creating an illusion of demand.
The practice was banned in 2008 after the financial crisis, and in recent years federal regulators have ramped up efforts to crack down on market manipulation.
The charges against JPMorgan were 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,” according to the CFTC.
The order finds that JPMorgan’s illegal trading “significantly benefited” the bank while it “harmed other market participants.”
In an accompanying statement, CFTC commissioner Dan Berkovitz said that he opposed his agency’s ruling that JPMorgan’s actions “should not result in any disqualifications under the ‘bad actor’ provisions of the securities laws.”
“For eight years, a group of traders at JPMorgan systematically `spoofed’ precious metals and Treasury futures markets by entering hundreds of thousands of orders with the intent to cancel them before execution,” Berkovitz said. “The Commission’s Order finds that JPMorgan manipulated these markets and failed to diligently supervise its traders.”
“Spoofing is illegal—pure and simple,” said 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,” he added.
JPMorgan has also settled a long-running lawsuit accusing the bank of manipulating precious metals markets, according to CNBC. Three plaintiffs had alleged that JPMorgan manipulated the silver futures market from 2010 through 2011 with “spoofing” trades, though details of this separate settlement were not disclosed in court filings.