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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)

#61

Post by arcticbull »

anonymoushn wrote: post #33
olalonde wrote: post #16

Earlier quoted context omitted.

If I understand correctly, the people harmed by the practice of spoofing are day traders who naively believe they can do technical analysis on an order book to determine the short-term direction of prices. Nope, I don't really feel sorry for either of them.

Day traders mostly don't even have access to real-time L2 market data, so they mostly can't be harmed by spoofing. The harmed parties are algorithmic traders that use L2 market data to adjust their theoretical value.

I assume L2 in this context means level 2 and not layer 2?

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

#63

Post by mrtksn »

j7ake wrote: post #51
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.

Even if they had exactly the same outcome, one is theft the other is simply breaking the rules.

It's a bit like killing a person using a gun and killing a person as a result of driving like the rules don't apply to you. Once it is established that you did the act, the first one undoubtedly puts you in jail for a very long time no matter who you are and the second one may get you a fine and no jail time so that no harm is made to your career(like the Qatari royal who killed a pedestrian in London).

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

#64

Post by lordnacho »

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,…

But there's a market where you can exchange the two, so they are roughly the same thing. If you have your 1% shares fined away, you can buy back the upside, if that's what you want. Or if you have a fine of 1% equivalent in cash, you can sell shares to pay for it.

Either way you've lost 1%, but you can decide whether to hold the upside exposure and voting control.

I think the key is the size of the fine. $1B to JPM is not really a whole lot. Maybe scaling the fine according to the size of the entity might make sense, but then there's a question of why everyone else at JPM is getting fined simply for doing their job in the same building as the guys who did this.

Edit. On second thought I guess you mean there will be a restriction on buying back the shares?

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

#65

Post by adriancr »

derriz wrote: post #30
adriancr wrote: post #27

Earlier quoted context omitted.

> anyone cancelling an order has to worry that their action could be interpreted as "spoofing" And getting investigated by CFTC, and CFTC finding proof that you never intended to execute it AND you profiting from steering market in the desired direction which would not have happened without the fake trade...

There were no "fake trades" involved in this case - only orders which were cancelled.

they were fined for 'spoofed' trades which in my view are fake trades - they never intended for them to execute, only to steer the market in a direction they want to fill in orders they had at a profit.

if those trades ran the risk of executing they would have probably been cancelled fast and moved further.

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

#66

Post by Terry_Roll »

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…

Its a little more subtle than that, you see how many people are employed directly and indirectly by the banks and what if that bank should headquarters abroad, how else will the Fed's get their "anonymous" tip offs?

Better ways is to launder your ill gotten gains through property, let a few more respectable people take a slice of the cake like lawyers, property surveyors, etc etc and then it all becomes good until you become a political pawn.

Edit.

I should add, even when "entrapped" by the FBI with a few $million of coke and its recorded on hidden camera's you can still get off if you have been useful to the country or a few country's, in this case playing a part in reducing the troubles in Northern Island.

Let me introduce. https://en.wikipedia.org/wiki/John_DeLorean https://www.youtube.com/watch?v=edsAIPfw_dE And then Hollywood had their own idea's https://www.youtube.com/watch?v=Psxktpxkc6o

It seems the FBI were not the brightest, considering how geopolitics works, or are they mere attack dogs?

The DeLorean is 40 years old now!

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

#67

Post by blowfish721 »

mrtksn wrote: post #63
j7ake wrote: post #51

Earlier quoted context omitted.

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.

Even if they had exactly the same outcome, one is theft the other is simply breaking the rules. It's a bit like killing a person using a gun and killing a person as a result of driving like the rules don't apply to you. Once it is established that you did the act, the first one undoubtedly puts you in jail for a very long time no matter who you are and the second one may get you a fine and no jail time so that no har…

Even though what you are saying is techically correct and the reason why things work this way I wish they didn’t. I would argue that since there was intent with the action and there were victims it should be considered a criminal case rather than just breaking the rules. The victims in this case being everyone losing money during a scheme like this.

The likeness of this towards accidently killing someone while breaking the rules for driving falls apart using this reasoning as well since in that case the intent isn’t to kill anyone. In the scenerio comparing this however to bank robbery both cases have the intent to get money.

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

#68

Post by carnitine »

csee wrote: post #58
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

They don’t. They clearly cover both cases.

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

#69

Post by pid-1 »

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.

Shareholders literally own the company. Not making them accountable for their companies actions is prob the worse incentive system ever.

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

#70

Post by thathndude »

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…

Executives needs to get jail time. But then they’ll just lobby for a new facility to be built in Aspen and for skiing to become part of the rehabilitation program.

I have no answers.

-Frustrated consumer protection attorney

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