Catch of the Week — Merrill Lynch Commodities Inc.
CONSTANTINE CANNON, 28 June 2019
Merrill Lynch Commodities Inc (“Merrill”), a commodity trading subsidiary of Bank of America Corporation, agreed on June 25th to two $25 million settlements with both the Department of Justice (“DOJ”) and the Commodity Futures Trading Commission (“CFTC”) to resolve allegations it conducted deceptive trading practices in United States commodities markets.
This settlement resolved allegations that from at least 2008 to 2014, Merrill precious metals traders manipulated precious metals futures markets through spoofing. The traders placed orders for precious metals futures that they intended to cancel before they were executed to create fake market depth. This fake market depth induced other market participants to buy or sell futures contracts when they otherwise may not have done so. This spoofing resulted in Merrill traders placing thousands of fraudulent futures orders.
Merrill agreed to a non-prosecution agreement with DOJ where it agreed to pay $25 million in criminal fines, restitution, and forfeiture. Merrill’s parent company, Bank of America Corporation, agreed to assist DOJ in ongoing investigations of individuals, enhance their compliance programs, and report any additional wrongdoing. Independent of the settlement with Merrill, DOJ also indicted two Merrill precious metals traders, Edward Bases and John Pacilio in conjunction with this matter.
