In September 2020, JPMorgan agreed to pay a $920 million fine to resolve investigations by the Department of Justice, the Commodity Futures Trading Commission, and the Securities and Exchange Commission into allegations that the bank engaged in market manipulation of precious metals and Treasury securities.
The investigations revealed that JPMorgan traders manipulated the prices of gold, silver, platinum, and palladium futures contracts on the Chicago Mercantile Exchange and the New York Mercantile Exchange. The bank was accused of using a variety of illegal techniques, including spoofing, a practice in which traders place fake orders to move prices in a desired direction, and other forms of market manipulation.
The settlement marked the largest-ever fine for spoofing and other forms of market manipulation by a U.S. bank. In addition to the fine, JPMorgan agreed to cooperate with ongoing investigations and to implement internal controls to prevent future misconduct.
JPMorgan did not admit to any wrongdoing as part of the settlement, but the bank acknowledged that its traders engaged in “unlawful conduct” and that it failed to adequately supervise their activities. The settlement marked the latest in a series of legal and regulatory challenges faced by JPMorgan in recent years.
Other banks fined for manipulation of precious metals
Several other banks have been fined for manipulation of precious metals markets in recent years. Here are a few notable examples:
These are just a few examples of banks that have been fined for manipulation of precious metals markets in recent years. The fines and settlements in these cases have totaled hundreds of millions of dollars and have highlighted concerns about the integrity of financial markets and the need for greater regulation and oversight.
Why would governments want precious metals prices to be low
Governments typically do not have a specific interest in keeping the prices of precious metals low. In fact, many governments hold large reserves of precious metals, such as gold, as a way to diversify their assets and provide a store of value in times of economic uncertainty.
However, some governments and central banks may take actions to influence the prices of precious metals as part of their monetary policy or to achieve specific economic objectives. For example, a government or central bank may sell or purchase precious metals in the open market as a way to stabilize exchange rates, manage inflation, or influence the supply of money.
In some cases, governments may also take actions to suppress the prices of precious metals to protect their own currencies or to prevent inflation from getting out of control. For example, during periods of high inflation, a government may try to keep the price of gold low to discourage people from buying it as a hedge against inflation and to encourage them to hold the local currency instead.
However, it’s worth noting that manipulating the prices of precious metals is generally considered unethical and can have negative consequences for market participants, including investors and traders. It can also lead to legal and regulatory repercussions, as seen in the recent fines imposed on banks for manipulating precious metals markets.