JPMorgan pays $60 million to settle long-running spoofing lawsuit
JPMorgan Chase and two subsidiaries have reached a settlement agreement with US regulator to pay $60 million to resolve civil and criminal charges that its traders rigged precious metals futures and options.
The fine wraps up a long-running lawsuit that saw federal prosecutors at the Justice Department Fraud Section and top US regulators, the Commodity Futures Trading Commission and Securities and Exchange Commission, involved in the probes.
The spoofing lawsuit was originally filed against the US bank in 2015 by a hedge fund operator and two metals traders. At the time, JPMorgan denied the allegations and even managed to get the plaintiffs’ claims dismissed by a judge. However, the case was reopened in 2017 after four traders who had worked for the bank’s metals unit were arrested and charged in the probe.
Christian Trunz, who worked at the bank’s London, Singapore, and New York offices, admitted conspiring with other gold, silver, platinum and palladium traders to place hundreds of buy or sell orders that he intended to cancel and not to execute at the time he placed the orders, a practice known as spoofing.
He pleaded guilty to two counts of conspiracy to commit wire fraud, agreed to meet with investigators and has been cooperating against unnamed co-conspirators, court records show.
The case was the latest in a series of prosecutions brought by US regulators as they have cracked down on spoofing. Trunz’s settlement followed the guilty plea by John Edmonds, another former trader at the bank in 2018.
Spoofing, in general, is a practice in which a trader floods the market with fake orders by entering and quickly cancelling large buy or sell orders on an exchange, to fool other traders into thinking the market is poised to rise or fall. Though the tactic has long been used by some traders, regulators began clamping down on the practice only a few years ago.