JP Morgan Chase Settles Trading Misconduct Charges

October 1, 2020
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America’s biggest bank will pay a record fine to settle allegations of trading misconduct. JP Morgan Chase (NYSE: JPM) agreed this week to pay $920 million in a settlement surrounding its manipulation of future trades related to Treasury Bonds and Precious Metals.

Regulators stated that the bank had manipulated the markets, and that the fine sends an “important message” to the wider banking industry.

A Strong Penalty for Serious Misconduct

The Commodity Futures Trading Commission (CFTC) said earlier this week that JP Morgan Chase was engaged in “deceptive conduct” for at least eight years. The bank conducted spoof trades, orders that are placed and then almost immediately canceled, to manipulate the markets and deceive investors.

Spoof trades can be used to create false demand for assets, effectively lowering or raising prices, depending on the motives of the trader.

In a statement released by the CFTC, the agency said that “Spoofing is illegal, pure and simple.” It also noted that the action would send a warning to other banks and trading institutions that “If you engage in manipulative and deceptive trade practices you will be caught.”

The fine will have a significant impact on JP Morgan Chase while also dealing a blow to its reputation as a leader in the banking industry. It is America’s biggest bank in terms of assets.

JP Morgan Chase Accepts Fine Without Contest

JP Morgan Chase agreed to the settlement to bring a swift end to the ongoing regulatory action. The bank sought to reassure its customers that it has removed the responsible parties and is committed to fair trading.

The bank called the actions of the traders involved “unacceptable” and said that they are “no longer with the firm.”

The illegal spoof trades occurred between 2008 and 2016.

While the bank is eager to move on from the scandal, some groups aren’t happy with the outcome. Better Markets, a prominent nonprofit financial watchdog, said that the settlement was a “miscarriage of justice.”

Shares in JP Morgan Chase are down in the year so far and this latest news could cause some volatility in the coming days. Investors may still look at the stock as a bargain, especially considering its high dividend and its potential to grow during the ongoing economic recovery.

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