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The JPMorgan settlement case has expectedly resulted in the firm’s shares losing 81 cents (0.84%) of their value on Tuesday.
The shares of investment banking giant JPMorgan Chase & Co (NYSE: JPM) dipped on Tuesday following reports that the firm will be paying about $920 million in settlement to clear off its market manipulation or ‘spoofing’ charges levied by the Commodity Futures Trading Commission (CFTC). Per the official release from the CFTC, the JPM settlement became necessary as the firm and its subsidiaries including JPMorgan Chase Bank, N.A., and J.P. Morgan Securities LLC (JPMS) were charged with market manipulation (generally known a ‘spoofing’) into the trading of metal futures and treasury securities spanning between 2008 and 2016.
With Spoofing, traders would attempt to create a false impression of demand and supply in the market by placing orders on one side of the market which they never intended to execute, to create a false impression of a buy or sell interest that would raise or depress prices, according to the settlement. The CFTC alleges that JPM was involved hundreds of thousands of spoof orders in precious metals and U.S. Treasury futures contracts on the Commodity Exchange, Inc., the New York Mercantile Exchange, and the Chicago Board of Trade.
As Reuters reported, U.S. regulators had been more forthcoming in recent times to fish out Spoofing trades on US markets with new analytics tools developed to detect such illegal activities.
“Spoofing is illegal—pure and simple,” said CFTC Chairman Heath P. Tarbert. “This record-setting enforcement action demonstrates the CFTC’s commitment to being tough on those who intentionally break our rules, no matter who they are. Attempts to manipulate our markets won’t be tolerated. The CFTC will take all steps necessary to investigate and prosecute illegal activities that could ultimately undermine the integrity of the American free enterprise system.”
The JPMorgan settlement case has expectedly resulted in the firm’s shares dropping 81 cents (0.84%) on Tuesday, a dip was corrected in the pre-market with about 0.22% rise. But now the stock is 0.37% down again. JPM investors seem unbothered by the huge settlement probably owing to how the firm handled the arguably unfavorable PR.
JPMorgan Settlement, Details and Response
According to the CFTC, the JPMorgan $920.2 million settlement involves a $311,737,008 in restitution, $172,034,790 in disgorgement and civil monetary penalty amounting to $436,431,811.
In a press release issued to investors yesterday, the firm attributed the wrongdoing to some unnamed former employees who have long been relieved of their duties.
“The conduct of the individuals referenced in today’s resolutions is unacceptable and they are no longer with the firm,” said Daniel Pinto, co-president of JPMorgan Chase and CEO of the Corporate & Investment Bank. “We appreciate that the considerable resources we’ve dedicated to internal controls was recognized by the DOJ, including enhancements to compliance policies, surveillance systems and training programs,” the company said in a response that seems to be pacifying investors as shown in the firm’s stock activity in the past 24 hours.
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