Jaclyn Jaeger, 27 June 2019
Merrill Lynch Commodities, a global commodities trading business, will pay a combined $25 million in criminal fines, restitution, and forfeiture of trading profits to resolve a government investigation into a multi-year scheme to mislead the market for precious metals futures contracts traded on the Commodity Exchange, the Department of Justice announced.
According to MLCI’s admissions, from 2008 through 2014, precious metals traders employed by MLCI schemed to deceive other market participants with materially false and misleading information. They did so by placing fraudulent orders for precious metals futures contracts that, at the time the traders placed the orders, they intended to cancel before execution.
In doing so, the traders aimed to “spoof,” or manipulate the market, by creating the false impression of increased supply or demand, the Justice Department said. Over the relevant period, the traders placed thousands of fraudulent orders.
In addition to the $25 million in fines, MLCI entered into a non-prosecution agreement, the terms of which require MLCI and its parent company, Bank of America, to cooperate with the government’s ongoing investigation of individuals and to report to the Justice Department evidence or allegations of violations of the wire fraud statute, securities and commodities fraud statute, and anti-spoofing provision of the Commodity Exchange Act in Bank of America’s Global Markets’ Commodities Business.