News networks are reporting that J.P. Morgan Securties LLC, a broker-dealer subsidiary of JP Morgan Chase & Co., is being charged by the Securities and Exchange Commission (SEC) for engaging in manipulative trading of U.S Treasury securities. The company has reportedly admitted the SEC’s findings and agreed to pay a penalty of $10 million and a civil fine of $25 million, respectively, to settle the case.
According to the complaint, a handful of traders on the J.P. Morgan Securities Treasuries department were involved in manipulative trading strategies on Treasury cash securities between April 2015 and January 2016. The traders placed bona fide orders to buy or sell Treasury security but simultaneously placed non-bona fide orders that they did not intend to execute for the same Treasury security on the opposing side of the market.
The SEC found that the non-bona fide orders were merely issued to create a false image of a buy or sell interest that would ultimately stimulate others in the market to trade against the bona fide orders at prices that were more beneficial for J.P. Morgan Securities. If this were not the case, J.P. Morgan Securities would not have obtained such profits.
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After the bona fide orders had been executed and secured, the non-bona fide orders were canceled. The SEC is charging the involved traders due to this action.
Moreover, the U.S Department of Justice and the U.S Commodity Futures Trading Commission announced a similar action against JP Morgan Chase & Co., including some of its affiliates, for partaking in manipulative trading in several markets such as precious metals, U.S. Treasuries future, and cash markets. Across the three actions, JP Morgan Chase & Co. will have to pay an astounding figure of $920 million for criminal restitution, disgorgement, penalties, and forfeiture.
The DOJ and J.P. Morgan Chase & Co. agreed to a three-year deferred persecution agreement. Also the CFTC has settled with J.P Morgan Chase & Co., JPMorgan Chase Bank. JPMorgan Securities, and N.A.
As per a violation of Section 17(a)(3) of the Securities Act of 1933, J.P. Morgan Securities agreed to the SEC’s order and stated that the finding. The firm was given an order to cease and desist from any future violation of Section 17(a). The amounts of $10 million and $25 million will be paid by JPMorgan Chase & Co., and offset the civil penalties and settle the case.