In September 2020, JPMorgan Chase & Co., along with subsidiaries JPMorgan Chase Bank, N.A., and J.P. Morgan Securities LLC, agreed to pay a total of approximately $920 million to settle parallel investigations by the U.S. Department of Justice (DOJ), Commodity Futures Trading Commission (CFTC), and Securities and Exchange Commission (SEC) into spoofing and manipulative trading schemes in precious metals futures (gold, silver, platinum, and palladium) and U.S. Treasury futures markets. These schemes occurred primarily between 2008 and 2016 on exchanges operated by CME Group, including COMEX, NYMEX, and CBOT.

Breakdown of the $920 Million Settlement

The penalties were allocated as follows:

  • DOJ: $920 million total criminal monetary penalty (including $350 million in forfeiture and victim compensation, offset by amounts paid to other agencies).
  • CFTC: $650 million civil monetary penalty (the largest in CFTC history at the time), plus $285.6 million in restitution to harmed customers and $119.4 million in disgorgement of ill-gotten gains.
  • SEC: $25 million civil penalty and $10 million in disgorgement (related to cash market trading in U.S. Treasuries).

JPMorgan entered a deferred prosecution agreement (DPA) with the DOJ, admitting responsibility for wire fraud but avoiding formal charges by agreeing to enhanced compliance reforms, including improved trade surveillance, trader training, and internal disciplinary measures against involved employees (e.g., termination or suspension of certain traders).

CME Group's Role and Specific Actions

The spoofing involved placing large, non-bona fide orders in CME Group's Globex electronic trading system to artificially influence prices, resulting in over $311 million in estimated losses to other market participants. However, based on a comprehensive review of regulatory filings, CME disciplinary notices, and related announcements:

  • No additional fines, suspensions, or expulsions were imposed by CME Group directly on JPMorgan in 2020 specifically for this conduct. The exchange's primary involvement was as the venue for the trades, where it provided data and surveillance support to the investigating agencies.
  • CME Group's Market Regulation Department routinely monitors for spoofing under rules like Rule 575.A (Prohibited Conduct) and Rule 534 (Disruptive Practices), but the resolution was handled at the federal regulatory level rather than through separate exchange-level enforcement.
  • JPMorgan remained a clearing member of CME Group throughout and after 2020, with no interruption noted in its membership status tied to this matter.

Other CME Disciplinary Actions Against JPMorgan Affiliates in 2020

For completeness, CME did issue minor unrelated disciplinary notices against JPMorgan entities in 2020:

  • January 2020 (COMEX-RSRH-19-5668): J.P. Morgan Securities plc fined $5,000 for violating Rule 526.F (Block Trades – Exchange for Physicals) by failing to properly report EFP transactions in platinum futures.
  • March 2020 (COMEX-RSRH-20-5733): J.P. Morgan Securities LLC fined $3,000 for violating Rule 854 (Concurrent Long and Short Positions) via improper position transfers in silver futures.

These were administrative and unrelated to spoofing or the DOJ settlement.

Source: Grok.com by Xai