JPMorgan Likely To Face Lawsuit For Precious Metal Spoofing
Zacks Investment Research | Feb 05, 2020 08:18PM ET
Per a Bloomberg’s article, JPMorgan Chase (NYSE:JPM) is likely to face a criminal lawsuit over rigging precious-metals futures. The authorities that had previously accused six of the bank’s employees of the same misconduct are now planning to charge the company.
The Department of Justice and the Commodity Futures Trading Commission have been investigating the company’s precious metals desk’s trading practices for the past two years.
Per the investigators, the bank was engaged in spoofing, i.e. manipulating the market by placing orders and then canceling, in the period between March 2008 and August 2016. The Wall Street biggie has not been accused formally, so far.
In 2019, the authorities accused traders, who were working in New York, London and Singapore, including the former global head of base and precious metals trading at JPMorgan, of participating in a racketeering conspiracy to manipulate the markets and cheat customers. Regulators have accused JPMorgan metals traders under the Racketeer Influenced and Corrupt Organizations Act (RICO).
Under the RICO statute, regulators can charge multiple criminal acts involving a group of people in the same case, on the condition that they were part of the same enterprise. Of the accused employees, two have pleaded guilty and are cooperating with authorities.
The Justice Department is conducting multiple criminal investigations into big banks with the cooperation of traders who have pleaded guilty to spoofing-related crimes.
Notably, other big banks like Bank of America (NYSE:BAC) , Deutsche Bank (NYSE:DB) and HSBC Holdings (NYSE:HSBC) had to pay penalties for spoofing in 2018.
While JPMorgan has resolved quite a lot of litigation issues by now, it still faces investigations by several federal agencies and a few foreign governments for its business conducts in the pre-crisis period. Legal expenses are expected to continue weighing marginally on the company’s bottom line in the near future.
JPMorgan’s shares have gained 34.4% in the past 12 months compared with the Zacks Investment Research
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