Breakwater Trading sues JPMorgan for alleged manipulation of prices of US Treasury futures

Maria Nikolova

Breakwater Trading alleges that JPMorgan routinely engaged in spoofing at the expense of the plaintiff and the Class, successfully manipulating the Treasury Futures trading market to benefit its own trading positions.

Breakwater Trading LLC has launched a civil lawsuit against JPMorgan Chase & Co. (NYSE:JPM), JP Morgan Clearing Corp., JP Morgan Securities LLC, and JP Morgan Securities LLC, accusing them of manipulating the US Treasuries futures market. The complaint, seen by FinanceFeeds, was filed on May 5, 2020, with the New York Southern District Court.

Breakwater Trading launched the action on behalf of itself and a class of those similarly situated. The Class is defined as:

“All persons or entities who transacted in Treasury Futures or options on Treasury Futures traded on a United States exchange during the period January 1, 2009 through the present (the “Class Period”), where such persons or entities were domiciled in the United States or its territories. Excluded from the Class are the Defendants and any parent, subsidiary, affiliate, employee, agent or co-conspirator of any Defendant”.

During certain portions of the Class Period, Breakwater was a top 15 liquidity provider for Treasuries. Breakwater’s Treasuries transactions included both spot and futures trading which averaged, on a daily basis, over $4 billion in notional value.

In this action, Breakwater alleges that the defendants manipulated the prices of Treasury Futures by “spoofing”. This practice artificially created demand, and the corresponding effect was that futures prices were artificially suppressed or inflated accordingly.

According to the plaintiff, throughout the Class Period, th defendants routinely engaged in spoofing at the expense of Plaintiff and the Class, successfully manipulating the Treasury Futures trading market to benefit their own trading positions.

The complaint alleges that, throughout the Class Period, the defendants perpetrated a sophisticated manipulative scheme in which they injected materially false and illegitimate signals of supply and demand into the Treasury Futures market in order to (a) induce other market participants to trade against Defendants’ genuine orders (i.e., orders that Defendants did want to execute) on the opposite side of the market from the spoof orders at prices, quantities, and times at which Plaintiff and other market participants otherwise would not have traded, and (b) financially benefit Defendants.

The defendants are alleged to have routinely placed electronic orders to buy and sell Treasury Futures with the intent to cancel those orders before execution to make profits and avoid losses.

Moreover, the plaintiff notes that defendants disclosed that they are subject to a criminal investigation related to their misconduct. In its most recent Form 10-K, Defendant JP Morgan Chase & Co admitted that the Department of Justice’s Criminal Division is investigating “trading-practice issues in markets…such as U.S. Treasuries.”

The plaintiff seeks, inter alia, that the defendants are permanently enjoined and restrained from continuing and maintaining the manipulation alleged in the Complaint, as well as a judgment awarding the plaintiff and the Class damages against the defendants, in an amount to be trebled in accordance with the law.

  • Read this next

    Digital Assets

    Hong Kong ends license applications for crypto exchanges

    Hong Kong has officially ceased accepting license applications from cryptocurrency exchanges as of February 29, signaling a stringent regulatory shift.


    Volt secures EMI license, expands payment solutions in UK

    Volt has successfully obtained an Electronic Money Institution (EMI) license from the UK’s Financial Conduct Authority (FCA).

    Retail FX

    ASIC bankrupts finfluencer Tyson Scholz over stock tips

    The Australian Securities and Investments Commission (ASIC) has effectively bankrupted Tyson Robert Scholz, the figure behind “Black Wolf Pit.” The action marks a significant crackdown on so-called ‘finfluencers’ and individuals providing unlicensed financial services.

    Digital Assets

    Green Bitcoin Presale Raises $1M as Bitcoin Approaches its ATH

    The eco-friendly crypto project Green Bitcoin has seen its limited-time presale phase cross $1 million in funding. With an innovative gamified staking model and energy-efficient foundation, Green Bitcoin offers token holders a way to stake their tokens and generate yield.


    Introducing QuickNode Streams: Elevating Blockchain Data Management

    Discover QuickNode’s Latest Innovation: Streamlining Blockchain Data Streaming for Enhanced Efficiency and Accessibility. Explore the Future of Blockchain Technology with Streams.

    Industry News

    John Oliver rips into MetaTrader over role in ‘Pig Butchering’ scams

    “If your friend told you to download an app, and you saw it in the app store with good reviews, you might assume everything on it was legitimate. In before, you saw MetaTrader’s logo which looks like three men in suits jerking each other off under a table – an appropriate metaphor for cryptocurrency if I have ever seen one,” Oliver quipped.

    Digital Assets

    Coinbase supports Nethermind and Erigon to ease Geth dependency

    Coinbase plans to support additional execution clients as America’s largest crypto platform aims to improve the Ethereum blockchain’s resilience and mitigate the risks associated with the network’s heavy reliance on a single client.


    How AI Transforms Trading: Current Trends and Perspectives

    In 2023, we observed a boom of news about Artificial Intelligence (AI) in every field, whether finance, tech or medicine. In 2024 and later, AI will take an even more significant place.

    Industry News, Uncategorized

    FCA wants to tackle lack of competition in wholesale data market

    “Complex licensing practices by MDVs and trade data providers who deliver their data through MDVs increase costs for data users. Many Market Data Vendor (MDV) users have to hold licences both from the data generator (such as a trading venue) and from the MDV through which they access data. We have seen an increasing proliferation of licences for similar data types and different use cases. Complexity also drives additional costs for data users, such as operating a compliance team.”