By John McDonald
In the wake of criminal charges being filed against multiple JPMorgan Chase & Co. traders by U.S. authorities, British financial services regulators are examining their behavior as well.
The U.K. Financial Conduct Authority (FCA) has requested “documents and other information” from JPMorgan Chase, according to unnamed sources.
The sources added it is unclear whether the investigation will result in charges and that they were not sure of the “exact scope of the FCA scrutiny.”
While the FCA may not have made up its mind about the big banker, the U.S. Department of Justice has moved ahead with charging five current and former JPMorgan metals traders with alleged price manipulation.
The scheme is alleged to have taken place between 2007 and 2016. It spanned the globe, with traders working together across oceans in offices in New York, London, and Singapore.
New York and London are precious metals trading hubs, so the JPMorgan traders in those cities were able to influence metals prices by placing bids and then canceling them before they were fulfilled.
This created an illusion of demand for the precious metals that the traders, also called “spoofers,” could exploit to benefit their own market positions and trading strategies.
Although the charges against the JPMorgan staffers were made by U.S. authorities, some of those individuals were based in London at the time of the alleged spoofing activities.
As a result, London and U.K. authorities are very involved in investigating the allegations and examining all evidence to determine if it might be appropriate to charge some or all of the men under U.K. law as well.
The London Bullion Market Association (LBMA), has also publicly stated it is following the case closely. “[LBMA] takes very seriously all allegations of misconduct or criminal conduct which may prejudice or damage the integrity or efficient operation of the precious metals markets,” the associations said in a recent statement.
In the United States, the Commodity Futures Trading Commission (CFTC), the U.S. Department of Justice, and the FBI have combined technological forces to create improved methods of data analysis they hope will help detect and track spoofing.
“Well-functioning commodity and derivatives markets should work for all Americans. These markets ensure the stability in prices that customers have come to expect, and the economic growth Americans enjoy,” said CFTC director of enforcement James McDonald.
He added, “We will continue to invest in our data analysis capabilities in an effort to maximize our ability to detect and ultimately deter misconduct across a range of trading activities in our markets.”