InvestorQ : What is the story of JP Morgan paying $1 billion as penalties to the US authorities?
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What is the story of JP Morgan paying $1 billion as penalties to the US authorities?

Answer
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1 month ago


One of America’s foremost banks, JPMorgan Chase, will pay close to $1 billion to resolve allegations of market manipulation on the bank as part of the investigations conducted by the US authorities into its trading of metals futures and Treasury securities.

While the penalty appears to be huge, the good news is that it would finally lift a massive regulatory shadow that hung over the bank for several years. It also marks a regulatory win for the US authorities’ efforts to clamp down on illegal practices like spoofing in metals trading.

The final settlement with the Department of Justice, the SEC and the CFTC is actually expected to come as soon as next week and most likely will not entail any kind of restrictions on the business of the bank, which is a major positive.

Just for the sake of understanding, spoofing is a practice wherein some traders get together to synchronize and place orders with an intent to cancel so as to move prices to benefit their market positions. The US authorities have come down heavily on such practices.

As part of the elaborate investigations, the US Department of Justice has already charged six traders of J P Morgan Chase for manipulating metals futures between 2008 and 2016. This entire scam was prised open by the US authorities using sophisticated technology.