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CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

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Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#51

Post by j7ake »

axismundi wrote: post #29

“This action sends the important message that if you engage in manipulative and deceptive trade practices you will be caught, punished, and forced to give up your ill-gotten gains,” added Division of Enforcement Director James McDonald. No, Mr McDonald, it's quite the opposite. The important message is that if your organization can keep the profits from criminal activities higher than the penalties, they can perpetua…

It’s crazy. If one tried to steal 10k from the bank, you would go to jail. If you steal millions through illegal trade practices, you just pay a fraction of what you stole.

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#53

Post by lottin »

lostinquebec wrote: post #44
lordnacho wrote: post #3

As a trader, that does look really bad. These people know that the market looks at the orders to guess the state of supply and demand. The penalty looks big but it's over an 8 year period. It's not exactly a secret that some market participants work out some kind of imbalance measure, and of you've ever implemented a system like that, like I've done, it will have crossed your mind that you could shove a load of order…

I often wonder: wouldn't fines paid as a percentage of stock be a better deterrent? Taking stock off shareholders changes the fraud equation from risk of fine vs the profitability upside, to shareholder's losing real value. That's the role of shareholders AFAICT, to hold their board and the company accountable. Fail to do so and lose your shareholding seems the right direct risk. The fines could also be a lot larger,…

Shareholders can't be asked to police the company. That's not their job. They don't have the resources nor the expertise to do it.

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#54

Post by gameshot911 »

ohthehugemanate wrote: post #28

Across 8 years, what was the profit on this illegal activity? In any other branch of law there is a concept of the sentence providing a deterrent, or at least removing from the actor from the opportunity to repeat offend. Can someone knowledgeable help me understand why these concepts seem missing from financial market penalties like this? The same people still have their license, and probably didn't even suffer a lo…

> JPM is required to pay a total of $920.2 million—the largest amount of monetary relief ever imposed by the CFTC—including the highest restitution ($311,737,008), disgorgement ($172,034,790), and civil monetary penalty ($436,431,811) amounts in any spoofing case.

Disgorgement is the illegally gained profits they have to give up. The monetary penalty is the additional deterrent on top.

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#55

Post by selfhoster11 »

lottin wrote: post #53
lostinquebec wrote: post #44

Earlier quoted context omitted.

I often wonder: wouldn't fines paid as a percentage of stock be a better deterrent? Taking stock off shareholders changes the fraud equation from risk of fine vs the profitability upside, to shareholder's losing real value. That's the role of shareholders AFAICT, to hold their board and the company accountable. Fail to do so and lose your shareholding seems the right direct risk. The fines could also be a lot larger,…

Shareholders can't be asked to police the company. That's not their job. They don't have the resources nor the expertise to do it.

So they can push for ever greater profits, but not bear any responsibility?

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#56

Post by netcan »

lottin wrote: post #53
lostinquebec wrote: post #44

Earlier quoted context omitted.

I often wonder: wouldn't fines paid as a percentage of stock be a better deterrent? Taking stock off shareholders changes the fraud equation from risk of fine vs the profitability upside, to shareholder's losing real value. That's the role of shareholders AFAICT, to hold their board and the company accountable. Fail to do so and lose your shareholding seems the right direct risk. The fines could also be a lot larger,…

Shareholders can't be asked to police the company. That's not their job. They don't have the resources nor the expertise to do it.

No, but if fines are the mechanism for punishment/restitution, they may as well be marked to market cap.

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#57

Post by mshockwave »

axismundi wrote: post #29

“This action sends the important message that if you engage in manipulative and deceptive trade practices you will be caught, punished, and forced to give up your ill-gotten gains,” added Division of Enforcement Director James McDonald. No, Mr McDonald, it's quite the opposite. The important message is that if your organization can keep the profits from criminal activities higher than the penalties, they can perpetua…

exactly, the first thought I had after reading the press release was: soooo nobody went to jail for this?

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#58

Post by csee »

derriz wrote: post #22

Why do CFTC try to police this? For the money or optics? Orders far from the BBO are clearly irrelevant and those close to the BBO are not "free" for the spoofer given they have to bear the risk that the orders could be filled if the market moves. Effectively it means anyone cancelling an order has to worry that their action could be interpreted as "spoofing" - which will make market making more risky and expensive.…

How do you know it's far from BBO

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#59

Post by csee »

dudeinjapan wrote: post #23

For the uninitiated, "spoofing" does NOT mean what you think it might, e.g. spoofing network packets or making fake trade records. "Spoofing" simply means placing orders on the exchange orderbook which one supposedly does not intend to execute. I've never understood this, because any bid/ask order on the orderbook CAN be executed against, until it is canceled. If they were "flashing" large bids/asks that were being i…

Unlikely. You can't know which orders are spoofs because they're anonymous and blended with the majority of real orders. Anyone that tries to hit large spoof orders when they occasionally pop up will just lose money unless you figured out a way to detect their signal. Even then they'll just change up their tactics to better blend in if they start getting filled.

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#60

Post by dtech »

lottin wrote: post #53
lostinquebec wrote: post #44

Earlier quoted context omitted.

I often wonder: wouldn't fines paid as a percentage of stock be a better deterrent? Taking stock off shareholders changes the fraud equation from risk of fine vs the profitability upside, to shareholder's losing real value. That's the role of shareholders AFAICT, to hold their board and the company accountable. Fail to do so and lose your shareholding seems the right direct risk. The fines could also be a lot larger,…

Shareholders can't be asked to police the company. That's not their job. They don't have the resources nor the expertise to do it.

They don't need to police it, they need to give the board etc. the proper incentives to do business legally because they will be hurt financially if the business doesn't. The policing is still done by the government agencies.
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