JPMorgan Hit With Investor Suit After $920 Million Spoofing Fine

JPMorgan Chase & Co. failed to tell investors that some of its traders were manipulating the precious metals and Treasury futures markets, leading to a record $920 million spoofing penalty, according to a suit filed in federal court in New York.

The investment bank didn’t disclose that it lacked sufficient “controls and compliance protocols to enable it to identify and stop the misconduct,” the would-be class says in a U.S. District Court for the Eastern District of New York complaint alleging a 2% stock drop.

JPMorgan didn’t tell investors that its “earnings in the physical commodity market were, at least in part, ill-gotten,” and could lead to “enhanced” government scrutiny, the suit says. The bank also failed to disclose how it had “provided misleading information to” Commodity Futures Trading Commission “investigators at early stages of the investigation into the misconduct,” according to the investors.

The stock drop followed a Sept. 23 Bloomberg report on the then-unknown settlement, the complaint says.

JPMorgan also faces ongoing litigation from Treasury futures traders.

Causes of Action: Exchange Act §10(b)—Using a manipulative or deceptive device or contrivance for a securities transaction in violation of SEC rules (15 U.S.C. §78j); SEC Rule 10b-5—Employing a device, scheme, or artifice to defraud, making untrue statements or omitting facts, or engaging in any act, practice, or course of business which operates as a fraud or deceit (17 C.F.R. §240.10b-5).

Relief: Damages with interest; attorneys’ fees; court costs.

Potential Class Size: Hundreds or thousands who acquired JPMorgan securities from Feb. 23, 2016, through Sept. 23, 2020.

Response: A JPMorgan representative declined to comment Monday.

Attorneys: Rosen Law Firm PA represents the investors.

The case is Mehta v. JPMorgan Chase & Co., E.D.N.Y., No. 20-cv-05124, complaint filed 10/24/20.