JPMorgan Hit With Class Action Over Spoofing Allegations

A putative class of investors sued JPMorgan Chase & Co. and a group of precious metals traders employed by the bank in New York federal court Wednesday, saying they manipulated futures contracts through spoofing, days after the U.S. Department of Justice announced a former trader had pled guilty to his role in the alleged scheme.

The complaint accuses JPMorgan and its employees of manipulating the prices of precious metals futures contracts on the New York Mercantile Exchange and Commodity Exchange Inc. through a spoofing scheme where its traders would place orders for futures contracts with the intent to cancel those orders before execution, which would cause investors to buy and sell at artificial prices.

According to the complaint, JPMorgan, Edmonds and several unnamed employees orchestrated a scheme “to inject materially false and illegitimate signals of supply and demand into the market and … to induce other market participants to trade against” the orders that were placed by the defendants, which resulted in the investors trading at prices, quantities and times that they may have not traded at or during that timeframe.

The complaint alleges that the spoofed orders led to precious metals futures and options contracts to be traded at a price favorable to the defendants and unfavorable to the putative class from Jan. 1, 2009 through Dec. 31, 2015.

The case is Cognata v. JPMorgan Chase & Co. et al., case number 1:18-cv-10356, in the U.S. District Court for the Southern District of New York.

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