Tag: CFTC

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Article: The Vitol Enforcement Action: Part 1 – Market Manipulation Through Corruption

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The Vitol Enforcement Action: Part 1 – Market Manipulation Through Corruption

Thomas Fox, 07 December 2020

Last week the Department of Justice (DOJ) settled a multi-part enforcement action, partly involving the Foreign Corrupt Practices Act (FCPA), with Vitol Inc. (Vitol), the US subsidiary of Vitol Holding II SA. Vitol agreed to pay a combined $135 million to resolve matters.

Interestingly, also included in the overall settlement was a disgorgement of more than $12.7 million to the Commodity Futures Trading Commission (CFTC) in a related matter and a penalty payment to the CFTC of $16 million related to trading activity. The FCPA component was settled via a Deferred Prosecution Agreement (DPA) and Criminal Information (Information). Continue reading “Article: The Vitol Enforcement Action: Part 1 – Market Manipulation Through Corruption”

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Article: Vitol to pay $95.7 million to settle fraud, market manipulation charges

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Vitol to pay $95.7 million to settle fraud, market manipulation charges

Reuters Staff, 04 December 2020

WASHINGTON (Reuters) – Energy and commodities trading firm Vitol Inc has agreed to pay $95.7 million to settle charges of corruption-based fraud and attempted market manipulation, the U.S. Commodity Futures Trading Commission on Thursday.

Houston-based Vitol did not admit or deny the charges, but agreed to pay the civil penalties related to making bribes and offering kickbacks to employees of certain state-owned entities in Brazil, Ecuador and Mexico in exchange for “preferential treatment and access to trades,” the regulator said.

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Article: Market manipulation, excessive speculation and price fixing in commodities

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Market manipulation, excessive speculation and price fixing in commodities

Dr. Steve Suppan, 26 October 2020

On October 15, by a 3-to-2 vote, the Commodity Futures Trading Commission (CFTC) approved a woefully inadequate final rule to prevent market manipulation and excessive speculation in physical commodity derivatives contracts. The rulemaking process had begun in 2010, but a successful Wall Street lawsuit in 2012 concerning a few words in the Dodd Frank Wall Street Reform and Consumer Financial Protection Act of 2010, prevented its finalization while there was a Democratic majority of commissioners. This final rule is based on a May 15, 2020 proposal, following the majority’s vote to withdraw 2013 and 2016 proposals and supplements to proposals. IATP has commented on all the proposed rules, beginning in 2010 and up to the May proposal.

Commissioner Rostin Behnam noted in his dissent to the 899-page voting draft of the rule that the CFTC was still investigating an unprecedently large April 20-21 price swing in the West Texas Intermediate (WTI) crude oil contract. Why rush to finalize the rule before the completion of the WTI investigation? The majority needed to vote before Commissioner Brian Quintenz departs the CFTC at the end of October. Continue reading “Article: Market manipulation, excessive speculation and price fixing in commodities”

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Article: JPMorgan Chase Pays nearly $1 Billion in Fines for Market Manipulation of Precious Metals and U.S. Treasuries

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JPMorgan Chase Pays nearly $1 Billion in Fines for Market Manipulation of Precious Metals and U.S. Treasuries

Carolina Gonzalez, 16 October 2016

JPMorgan Chase & Co. agreed to pay over $955 million to settle civil and criminal charges over a scheme involving fake trades in precious metals and U.S. treasuries designed to manipulate the market in an effort to enhance the bank’s profits and cut losses. The multi-agency enforcement action was brought by the Commodity Futures Trading Commission (CFTC), the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). For nearly a decade, JPMorgan Chase & Co’s traders sitting in New York, London, and Singapore used spoofing to manipulate hundreds of thousands of transactions in precious metals futures markets, including gold and silver, as well as U.S. Treasury cash and futures markets.

The CFTC alone imposed a whopping $920 million fine, the largest ever imposed by the agency in a spoofing case, including nearly $312 million in restitution to harmed investors, $172 million in disgorgement of ill-gotten gains, and over $436 million in civil penalties. This record-setting action signals the CFTC’s resolute commitment to punish those who engage in manipulative and deceptive trading practices. The hefty fine also reflects the bank’s failure to prevent and cease the wrongdoing, as well as its failure to provide adequate cooperation to regulators in the early stages of the investigation. Continue reading “Article: JPMorgan Chase Pays nearly $1 Billion in Fines for Market Manipulation of Precious Metals and U.S. Treasuries”

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Article: JPMorgan pays $920 million to settle spoofing claims

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JPMorgan pays $920 million to settle spoofing claims

Bloomberg News, 29 September 2021

The New York-based lender will pay the biggest monetary penalty ever imposed by the CFTC, including a $436.4 million fine, $311.7 million in restitution and more than $172 million in disgorgement, according to a statement from the Commodity Futures Trading Commission.

The CFTC said its order will recognize and offset restitution and disgorgement payments made to the Department of Justice and Securities and Exchange Commission.

The accord ends a criminal investigation of the bank that has led to a half-dozen employees being charged for allegedly rigging the price of gold and silver futures for more than eight years. Two have entered guilty pleas, and four others are awaiting trial. Continue reading “Article: JPMorgan pays $920 million to settle spoofing claims”

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Article: CFTC & SEC: JP Morgan manipulated Treasuries market during flash crash period

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CFTC & SEC: JP Morgan manipulated Treasuries market during flash crash period

dan.barnes, 29 September 2020

US market regulators the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have fined JP Morgan over US$920 million in penalties and disgorgements for manipulative trading, or spoofing, in the US Treasuries, US Treasuries futures, and commodity markets, between 2009 and 2016. The CFTC noted that the bank also did not respond to warnings from the regulators or the CME and at points misled the investigation.

The bank’s behaviour during this period raises questions that neither the bank nor the regulators are prepared to answer, regarding its effect on market stability.

During the period in question, on 15 October 2014, the US Treasury market experienced a ‘flash crash’, which saw the 10-year treasury rate fall 34 basis points over a 10-minute period from 2.2% to 1.86%, a 52-week low, before rebounding for the end of day. Treasury futures volume reached nearly 1.6 million trades, an all-time record, having only broken the 800,000 trades a day barrier three times before.

A similar flash crash in the US equities markets in 2010 was attributed by the CFTC to manipulative trading by a lone trader on the CME via its E-mini S&P 500 futures.
Pinto
When asked whether JP Morgan’s activity had been reviewed as a potential trigger of the 2014 flash crash, both the SEC and CFTC declined to comment. JP Morgan also declined to comment.

The press office of the CME, which is also the market for US Treasury futures, declined to comment on how JP Morgan had spoofed on its markets for eight years without being stopped.

The CFTC found that from at least 2008 through 2016, JP Morgan, “through numerous traders on its precious metals and Treasuries trading desks, including the heads of both desks, placed hundreds of thousands of orders to buy or sell certain gold, silver, platinum, palladium, Treasury note, and Treasury bond futures contracts with the intent to cancel those orders prior to execution.”

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Article: JPMorgan to pay $920 million for manipulating precious metals, treasury market

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JPMorgan to pay $920 million for manipulating precious metals, treasury market

Abhishek Manikandan, Michelle Price, 29 September 2020

(Reuters) – JPMorgan Chase & Co has agreed to pay more than $920 million and admitted to wrongdoing to settle federal U.S. market manipulation probes into its trading of metals futures and Treasury securities, the U.S. authorities said on Tuesday.

The landmark multi-agency settlement lifts a regulatory shadow that has hung over the bank for several years and marks a signature victory for the government’s efforts to clamp down on illegal trading in the futures and precious metals market.

JPMorgan will pay $436.4 million in fines, $311.7 million in restitution and more than $172 million in disgorgement, the Commodity Futures Trading Commission (CFTC) said on Tuesday, the biggest-ever settlement imposed by the derivatives regulator.

Between 2008 and 2016, JPMorgan engaged in a pattern of manipulation in the precious metals futures and U.S. Treasury futures market, the CFTC said. Traders would place orders on one side of the market which they never intended to execute, to create a false impression of buy or sell interest that would raise or depress prices, according to the settlement.

This manipulative practice, which is designed to create the illusion of demand, or lack thereof, is known as “spoofing.”

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Article: JPMorgan Admits Wrongdoing In Illegal Trading Allegations, Will Pay Record $920 Million To Regulators

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JPMorgan Admits Wrongdoing In Illegal Trading Allegations, Will Pay Record $920 Million To Regulators

Sergei Klebnikov,  29 September 2020

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 that 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. Continue reading “Article: JPMorgan Admits Wrongdoing In Illegal Trading Allegations, Will Pay Record $920 Million To Regulators”

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Article: JPMorgan is set to pay US$1B in record spoofing penalty

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JPMorgan is set to pay US$1B in record spoofing penalty

Ben Bain, Tom Schoenberg and Matt Robinson, 23 September 2020

JPMorgan Chase & Co. is poised to pay close to US$1 billion to resolve market manipulation investigations by U.S. authorities into its trading of metals futures and Treasury securities, according to three people with knowledge of the matter.

The potential record for a settlement involving alleged spoofing could be announced as soon as this week, said the people who asked not to be named because the details haven’t yet been finalized. The accord would end probes by the Justice Department, the Commodity Futures Trading Commission and the Securities and Exchange Commission into whether traders on JPMorgan’s precious metals and treasuries desks rigged markets, two of the people said.

A penalty approaching US$1 billion would far exceed previous spoofing-related fines. It would also be on par with sanctions in many prior manipulation cases, including some brought several years ago against banks for allegedly rigging benchmark interest rates and foreign exchange markets.

Spoofing typically involves flooding derivatives markets with orders that traders don’t intend to execute to trick others into moving prices in a desired direction. The practice has become a focus for prosecutors and regulators in recent years after lawmakers specifically prohibited it in 2010. While submitting and then canceling orders isn’t illegal, it is unlawful as part of a strategy intended to dupe other traders.

It couldn’t be determined whether New York-based JPMorgan will face additional Justice Department penalties in court. Previous spoofing cases have been resolved without banks or trading firms pleading guilty to criminal charges. However, when prosecutors filed cases last year against individual JPMorgan traders they painted a grave picture of its precious metals desk, saying it operated as an illicit enterprise within the bank for almost a decade.

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Article: The Mysterious London Traders Accused of Manipulating Oil Markets — and the Anonymous Hedge Fund, Rare-Coin Expert, and Day Traders Who Are Fighting Back

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The Mysterious London Traders Accused of Manipulating Oil Markets — and the Anonymous Hedge Fund, Rare-Coin Expert, and Day Traders Who Are Fighting Back

Leah McGrath Goodman, 17 September 2020

Robert Mish is not an oil trader. He’s a numismatist — an expert in rare coins, precious metals, and currencies. Growing up in Brooklyn, he began by collecting stamps and playing cards at the age of four. From there, he moved on to coins and, eventually, valuable antiquities, heading out to California to start his own business in Menlo Park, Mish International Monetary. He traveled the world attending coin shows and became an authority on commodities such as gold, silver, platinum, and palladium, writing and contributing to a number of books.

This year, two months after his 73rd birthday, Mish found himself trading U.S. crude oil futures at perhaps their most inopportune moment: On April 20, the price of oil fell to zero — and kept falling. Mish, an expert in commodities, was holding ten oil contracts as the market went over the edge.

After 50 years of inspecting currencies and stores of value from the Americas to Europe to Asia, Mish can also claim another expertise: He is an expert in counterfeit detection. That day, as he watched his oil trades go south, he picked up the phone and called one of the best market-manipulation lawyers in the country.

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Article: Merrill Lynch Traders Can’t Avoid Spoofing, Fraud Charges

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Merrill Lynch Traders Can’t Avoid Spoofing, Fraud Charges

Law360, 21 May 2020

The government’s June 2018 indictment says the traders’ scheme between June 2009 and October 2014 created the illusion of market movement by using large orders to inflate the price, with no intention of filling the orders, thus committing wire fraud, commodities fraud and conspiracy to commit commodities fraud.

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Article: Government Is Broadening Investigations of Spoofing-Like Practices

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Government Is Broadening Investigations of Spoofing-Like Practices

Dave Michaels, 17 March 2020

WASHINGTON—Authorities are investigating whether traders at JPMorgan Chase & Co. manipulated the market for Treasury securities and futures contracts, according to regulatory disclosures and people familiar with the matter.

The investigation shows that federal prosecutors and regulators continue to expand a campaign against an illicit practice known as spoofing, which has mainly focused on wily trading in derivatives. A move to scrutinize whether similar practices have affected the $17 trillion market for Treasury securities would open a new, and potentially more complicated, front in the war on spoofing.

The bank disclosed in a Feb. 25 regulatory filing that it is dealing with “related requests concerning similar trading-practices issues in markets for other financial instruments, such as U.S. Treasurys.” According to people familiar with the matter, the investigation also is probing the bank’s trading in futures. It couldn’t be learned which time period authorities are focusing their investigation on.

The Justice Department’s Fraud Section and regulators at the Commodity Futures Trading Commission are involved, the people said. A spokeswoman for JPMorgan declined to comment. A spokesman for the Justice Department declined to comment.

Regulators and other authorities cracked down on spoofing after Congress specifically outlawed the feinting strategy in 2010. Citigroup Inc. paid $25 million in 2017 to settle regulatory claims that five traders spoofed Treasury futures. The same year, the Bank of Tokyo-Mitsubishi UFJ, Ltd. paid $600,000 to resolve CFTC claims over similar misconduct.

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Article: Mondelez, Kraft To Pay $16M To Resolve Allegations Of Futures Market Manipulation

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Mondelez, Kraft To Pay $16M To Resolve Allegations Of Futures Market Manipulation

Jayson Derrick, 06 March 2020

Food giants Mondelez International Inc MDLZ 0.07% and Kraft Food Groups will pay $16 million to settle allegations they created unfair advantages in wheat futures, The Wall Street Journal reported.

The Mondelez, Kraft Settlement
Mondelez and Kraft were once part of a single corporate entity, and they and appear to be set on resolving a dispute with the Commodity Futures Trading Commission, the newspaper reported Thursday. Continue reading “Article: Mondelez, Kraft To Pay $16M To Resolve Allegations Of Futures Market Manipulation”

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Article: Racketeering Law Makes Its Return to Wall Street

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Racketeering Law Makes Its Return to Wall Street

Peter J. Henning

The New York Times 24 October 2019

Prosecutors have not brought a case under the Racketeer Influenced and Corrupt Organizations Act, or RICO, against Wall Street traders since the investment firm Princeton Newport Partners was indicted in the mid-1980s. The RICO charges filed recently against three traders at JPMorgan Chase indicate that prosecutors may be resurrecting the law to target white-collar defendants.

Prosecutors accused Michael Nowak, who was the head of precious metals trading at the bank, along with Gregg Smith and Christopher Jordan, of organizing the precious metals desk as a RICO enterprise to engage in “spoofing,” as well as wire and bank fraud in which JPMorgan and its customers were the victims

“Spoofing,” which was made a crime by the Dodd-Frank Act, happens when traders are “bidding or offering with the intent to cancel the bid or offer before execution.”

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Release: CFTC Orders Two Trading Firms, Bank to Pay a Total of $3 Million for Spoofing

Release

CFTC Orders Two Trading Firms, Bank to Pay a Total of $3 Million for Spoofing

CFTC, 1 October 2019

The U.S. Commodity Futures Trading Commission today announced that civil enforcement actions were filed and simultaneously settled against two trading firms and one bank for violating the Commodity Exchange Act’s (CEA) prohibition on spoofing (bidding or offering with the intent to cancel the bid or offer before execution). These cases were brought in connection with the Division of Enforcement’s Spoofing Task Force.

“As these cases demonstrate, the CFTC is committed to preserving the integrity of our markets—like the financial and precious metals futures markets at issue here—and to rooting out unlawful practices like spoofing,” said CFTC Enforcement Director James McDonald. “We will continue to vigilantly investigate and prosecute misconduct by entities that spoof in our markets.”

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