- JPMorgan Chase and its subsidiaries are found guilty by CFTC and SEC.
- Almost a billion-dollar worth of settlement must be paid by JPM to the said agencies.
- Amid these charges, JPM has improved its payment fraud protection for SMBs.
JPMorgan Chase (JPM) and its subsidiaries are found guilty by the Commodity Futures Trading Commission (CFTC) on the grounds of manipulative and deceptive conduct, including spoofing, over a span of eight years.
The order emphasized that JPM’s illegal trading significantly benefited the company and harmed other market participants. To be specific, 15 traders from the biggest US bank caused losses of more than $300 million in precious metals and Treasury markets.
According to the CFTC statement, JPM is required to pay the largest amount of monetary relief ever imposed by the said agency. A total of $920.2 million must be settled which includes a $436.4 million fine, $311.7 million in restitution, and more than $172 million in disgorgement.
CFTC Chairman Heath P. Tarbert points out the severity of the situation:
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.
Aside from this, JPM’s broker-dealer subsidiary J.P Morgan Securities also admitted to the fraudulent charges of the Securities and Exchange Commission (SEC). For engaging in manipulative trading, they agreed to pay disgorgement of $10 million and a civil penalty of $25 million to settle the action.
Director of the SEC’s Division of Enforcement Stephanie Avakian expressed her disappointment for this matter:
J.P. Morgan Securities undermined the integrity of our markets with this scheme.
Ironically, amid these indictments, JPM has stepped up its payment fraud protection services for small-to-medium-sized businesses (SMBs) to help combat scam and fraud attempts. The bank’s new self-service “fraud hub,” would be allowing businesses to set alerts for unusually large payments.
Aside from being a leading lender to the traditional finance industry, JPM is getting into the DeFi zone as well. Its hybrid blockchain platform Kadena is set to release Kadenaswap, a multi-protocol decentralized exchange (DEX) before 2020 ends.
In addition to this, its proposed stablecoin JPM Coin was said to be designed to facilitate instantaneous payments using the Quorum blockchain protocol. Quorum has been recently acquired by Consensys, a Brooklyn-based tech startup.