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JPM settle spoofing lawsuit with $60mln payment

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(Kitco News) - Reuters have reported that JPMorgan Chase & Co has agreed to pay $60 million to settle class-action litigation by investors who accused the largest U.S. bank of manipulating prices of precious metals futures and options.

U.S. government investigations into a form of illegal trading in precious metals and U.S. Treasury markets, known as spoofing. Spoofing is where traders place orders they intend to cancel, hoping to move prices to benefit their market positions. For example, a trader could put a massive bid in to buy gold underneath the current price in the hope that other traders will see it and start buying. This could push the price higher when the original bid was never meant to be filled. All the while the traders could be holding the commodity watching the price rise.

The U.S. investment bank did not admit wrongdoing in agreeing to the settlement, which covers traders in precious metals futures and options from March 2008 to August 2016 and requires approval by a federal judge in Manhattan.

Lawyers for the investors called the accord "substantively fair," citing among other reasons the risks of continued litigation.
The payout would recover about 7% of the estimated $915 million of classwide damages, the lawyers added. JPMorgan declined to comment.

In September 2020, JPMorgan entered a deferred prosecution agreement and agreed to pay $920 million, including a $436 million criminal fine, to settle U.S. government probes into spoofing in precious metals and Treasuries. The New York-based bank in September reached a $15.7 million settlement with investors over Treasury spoofing. Lawyers for the precious metals investors plan to seek up to one-third of their settlement, or $20 million, to cover legal fees.

JPMorgan is not the only bank that has been in hot water over spoofing. U.S. authorities investigated two former employees of Deutsche Bank traders who were found guilty of manipulating gold and silver prices. After a two-week court case (Seltember 2020) a federal judge in Chicago found James Vorley, 42, of the United Kingdom, and Cedric Chanu, 40, of France and the United Arab Emirates, were convicted of three counts and seven counts, respectively, of wire fraud affecting a financial institution. Let's hope this latest action can help clean up market manipulation.


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