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“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 yo

“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 perpetuate it. That's because there are virtually no other consequences for any individual criminals personally responsible for this, and none of them was persecuted, punished and forced to give up his ill-gotten gains.

BizarroLand 5y ago
If any of us had the opportunity to make $1 billion dollars and pay a $920 million dollar "naughty boy" fine after the fact, who here would say no? The fine should be ALL of the ill-gotten gains and then a naughty boy fine on top of it. To do otherwise means that you did not do justice.
- evanpw 5y ago
  That's exactly what they did. The article says $172m disgorgement (how much the CFTC thinks they profited from this), $311m restitution (the amount the CFTC thinks JPM harmed others but didn't capture), and $436m civil penalty ("naughty boy" fine).
  - BizarroLand 5y ago
    I read that also, but it wasn't clear to me that the disgorgement was the profit, I assumed it was just what they had on hand from their takings, like if you rob a bank and get caught with $5k left then they would disgorge you of the $5k and then deal with the rest later.
- TrainedMonkey 5y ago
  I feel like both you and parent are ignoring operational + reputation costs of being naughty boys. If we are saying the bad behavior should not be profitable the fine should be above (ill gotten gains - operational costs it took to acquire them + whatever interest those ill gotten gains received before the culprit got caught). Reputational losses are also a thing, agencies and whistleblowers will be paying a lot more attention to this sort of thing from JPMorgan from now on. Maybe a lesser effect would be morally conscious people (in finance haha) choosing not to work there. Of course it is also possible that Chase PR machine greases the right hands to negate all of the downsides, and then you have a point that current political/regulatory climate is allowing this is be a profitable business model.
  - BizarroLand 5y ago
    I'm being dismissive but I doubt JP Morgan Chase is going to suffer any real backlash other than the direct financial punishment they are receiving here. There's also a good chance that they will file suit over it as it's worth spending a few million in lawyer fees to try to reduce or save the $920m entirely, so it's not even over yet.
- BiteCode_dev 5y ago
  If you are caught one time out of 10, this is still profitable and those people, being professional risk manager, will take the chance. Not to mention they can then invest the benefits in a difference venue, and make money from that, which will not be part of the fine. Jail time however, is not something everyone will want to gamble on. So, it should be what you said + jail.
ganzuul 5y ago
The kingpin got its share.
j7ake 5y ago
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.
- mrtksn 5y ago
  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).
  - blowfish721 5y ago
    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.
    - mrtksn 5y ago
      Actually you are right, they apparently did the spoofing with the intent to deceive specific traders so that the traders take action on this false information. The car analogy would have been accurate if they did what they did without a specific target.
  - toyg 5y ago
    This is actually not the case in quite a few countries nowadays. It Italy there is now a crime of "murder by driving" that gets automatically charged if there are victims in a car accident. Maybe it's time to make financial-crime penalties a bit harsher.
mshockwave 5y ago
exactly, the first thought I had after reading the press release was: soooo nobody went to jail for this?
Terry_Roll 5y ago
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://en.wikipedia.org/wiki/John_DeLorean https://www.youtube.com/watch?v=edsAIPfw_dE https://www.youtube.com/watch?v=edsAIPfw_dE And then Hollywood had their own idea's https://www.youtube.com/watch?v=Psxktpxkc6o 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!
thathndude 5y ago
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
- BLKNSLVR 5y ago
  You are doing a great service to consumers and you have my respect for your ongoing efforts despite the appearance of whispering into a hurricane.
  - fractal618 5y ago
    Whispering into a Hurricane… happy Monday everyone
- jsw97 5y ago
  Standards of proof are different.
- trident5000 5y ago
  Id also go lower down to trading managers who really know the day to day operations.
you-liquidated 5y ago
US prosecutors literally said that they cannot criminally charge JPM (in another case) because that would destabilize the US financial system. They are literally "too big to jail".
- JohnWhigham 5y ago
  The Chickenshit Club everyone
- maxwelldone 5y ago
  What's stopping them from charging the people responsible? Are the people so irreplaceable that they are effectively JPM?
  - fnordfnordfnord 5y ago
    They are not irreplaceable but it would create the sort of inverse "moral hazard" that might stop these practices, which are apparently what's being protected.
  - civilized 5y ago
    Hard to imagine that the Chief Financial Spreadsheet Monkey is irreplaceable. If you want someone irreplaceable, I'd look at the COBOL programmers.
  - andylei 5y ago
    they did charge them: https://www.cftc.gov/PressRoom/PressReleases/8013-19 https://www.cftc.gov/PressRoom/PressReleases/8013-19
  - tedivm 5y ago
    The revolving door between the financial sector and our government- if they jailed people now then when it's their turn to get rich off of their government connections they might risk jail.
  - spaetzleesser 5y ago
    It’s bad for campaign donations and bad for future highly paid job prospects in the financial industry. So politicians and agency workers have strong incentives to not be too tough on banks.
plebianRube 5y ago
I don't think people realize how much money JP makes. A cursor search shows that the fine is less than 10% of their last quarter NET income of 12.1 billion. I would certainly keep doing illegal things if my only penalty was a simple fine like that every 10 years.
- bojangleslover 5y ago
  Yes but they have nearly 200k employees and most of banking compensation is in the bonus, which draws from this net income. This leaves $63k excess which is obviously not distributed equally but, considering the fairly low base salaries compared to strong SWE roles, probably map to similar compensation. It's hard to not feel shocked when seeing numbers in the billions but you can't forget they are often accompanied by an equally shocking denominator.
- ycombobreaker 5y ago
  JPM makes a lot of money doing a lot of things. You need to compare the fine vs. their trading revenue.
  - plebianRube 5y ago
    Why would I look at just their trading revenue? The fine was levied against the entire company, not just their trading subsidiary. >settling charges against JPMorgan Chase & Company (JPMC & Co.) and its subsidiaries, JPMorgan Chase Bank, N.A., and J.P. Morgan Securities LLC (JPMS) (collectively, JPM)
    - swsieber 5y ago
      Because if these are trading actions that lead to these fines then a rational actor might decide against taking then in the future lest trading become a net negative.
    - gruez 5y ago
      > Why would I look at just their trading revenue? Why should you? Suppose you did a bad. Let's it was a side hustle where you took refurbished ipads and resold them as brand-new ipads. Over the past year you made $2000 in profit from doing so. The cops caught you doing it and fined you $10k. That sounds like a pretty serious penalty. However, you're also a bay area software engineer making $400k total comp, so $10k is a drop in the bucket. Should they fine you $200k instead, just because you happen to be a software engineer?
josephd79 5y ago
Facts.
fnordfnordfnord 5y ago
It's further enraging because people have been calling this out for years and mostly just been mocked and called conspiracy theorists for it.
rbarnes01 5y ago
"... including the highest restitution ($311,737,008), disgorgement ($172,034,790), and civil monetary penalty ($436,431,811) amounts in any spoofing case." Unless you are implying that JPM profited more than $172 million, the report suggests the government took the profits.
- jbay808 5y ago
  Is that penalty going to hit the people who were steering the ship at the time, who got big bonuses? Or is it only going to impact the bonuses of the people who are steering the ship today?
  - missedthecue 5y ago
    The CEO of JPM between 2008 and 2016 (the time period in question) is the same CEO that is in charge today.
hogFeast 5y ago
Wrong. They returned the profits, and paid two fines on top of that.

BizarroLand 5y ago

If any of us had the opportunity to make $1 billion dollars and pay a $920 million dollar "naughty boy" fine after the fact, who here would say no? The fine should be ALL of the ill-gotten gains and then a naughty boy fine on top of it. To do otherwise means that you did not do justice.

evanpw 5y ago
That's exactly what they did. The article says $172m disgorgement (how much the CFTC thinks they profited from this), $311m restitution (the amount the CFTC thinks JPM harmed others but didn't capture), and $436m civil penalty ("naughty boy" fine).
- BizarroLand 5y ago
  I read that also, but it wasn't clear to me that the disgorgement was the profit, I assumed it was just what they had on hand from their takings, like if you rob a bank and get caught with $5k left then they would disgorge you of the $5k and then deal with the rest later.
TrainedMonkey 5y ago
I feel like both you and parent are ignoring operational + reputation costs of being naughty boys. If we are saying the bad behavior should not be profitable the fine should be above (ill gotten gains - operational costs it took to acquire them + whatever interest those ill gotten gains received before the culprit got caught). Reputational losses are also a thing, agencies and whistleblowers will be paying a lot more attention to this sort of thing from JPMorgan from now on. Maybe a lesser effect would be morally conscious people (in finance haha) choosing not to work there. Of course it is also possible that Chase PR machine greases the right hands to negate all of the downsides, and then you have a point that current political/regulatory climate is allowing this is be a profitable business model.
- BizarroLand 5y ago
  I'm being dismissive but I doubt JP Morgan Chase is going to suffer any real backlash other than the direct financial punishment they are receiving here. There's also a good chance that they will file suit over it as it's worth spending a few million in lawyer fees to try to reduce or save the $920m entirely, so it's not even over yet.
BiteCode_dev 5y ago
If you are caught one time out of 10, this is still profitable and those people, being professional risk manager, will take the chance. Not to mention they can then invest the benefits in a difference venue, and make money from that, which will not be part of the fine. Jail time however, is not something everyone will want to gamble on. So, it should be what you said + jail.

ganzuul 5y ago

The kingpin got its share.

j7ake 5y ago

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.

mrtksn 5y ago
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).
- blowfish721 5y ago
  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.
  - mrtksn 5y ago
    Actually you are right, they apparently did the spoofing with the intent to deceive specific traders so that the traders take action on this false information. The car analogy would have been accurate if they did what they did without a specific target.
- toyg 5y ago
  This is actually not the case in quite a few countries nowadays. It Italy there is now a crime of "murder by driving" that gets automatically charged if there are victims in a car accident. Maybe it's time to make financial-crime penalties a bit harsher.

mshockwave 5y ago

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

Terry_Roll 5y ago

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

thathndude 5y ago

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

BLKNSLVR 5y ago
You are doing a great service to consumers and you have my respect for your ongoing efforts despite the appearance of whispering into a hurricane.
- fractal618 5y ago
  Whispering into a Hurricane… happy Monday everyone
jsw97 5y ago
Standards of proof are different.
trident5000 5y ago
Id also go lower down to trading managers who really know the day to day operations.

you-liquidated 5y ago

US prosecutors literally said that they cannot criminally charge JPM (in another case) because that would destabilize the US financial system. They are literally "too big to jail".

JohnWhigham 5y ago
The Chickenshit Club everyone
maxwelldone 5y ago
What's stopping them from charging the people responsible? Are the people so irreplaceable that they are effectively JPM?
- fnordfnordfnord 5y ago
  They are not irreplaceable but it would create the sort of inverse "moral hazard" that might stop these practices, which are apparently what's being protected.
- civilized 5y ago
  Hard to imagine that the Chief Financial Spreadsheet Monkey is irreplaceable. If you want someone irreplaceable, I'd look at the COBOL programmers.
- andylei 5y ago
  they did charge them: https://www.cftc.gov/PressRoom/PressReleases/8013-19 https://www.cftc.gov/PressRoom/PressReleases/8013-19
- tedivm 5y ago
  The revolving door between the financial sector and our government- if they jailed people now then when it's their turn to get rich off of their government connections they might risk jail.
- spaetzleesser 5y ago
  It’s bad for campaign donations and bad for future highly paid job prospects in the financial industry. So politicians and agency workers have strong incentives to not be too tough on banks.

plebianRube 5y ago

I don't think people realize how much money JP makes. A cursor search shows that the fine is less than 10% of their last quarter NET income of 12.1 billion. I would certainly keep doing illegal things if my only penalty was a simple fine like that every 10 years.

bojangleslover 5y ago
Yes but they have nearly 200k employees and most of banking compensation is in the bonus, which draws from this net income. This leaves $63k excess which is obviously not distributed equally but, considering the fairly low base salaries compared to strong SWE roles, probably map to similar compensation. It's hard to not feel shocked when seeing numbers in the billions but you can't forget they are often accompanied by an equally shocking denominator.
ycombobreaker 5y ago
JPM makes a lot of money doing a lot of things. You need to compare the fine vs. their trading revenue.
- plebianRube 5y ago
  Why would I look at just their trading revenue? The fine was levied against the entire company, not just their trading subsidiary. >settling charges against JPMorgan Chase & Company (JPMC & Co.) and its subsidiaries, JPMorgan Chase Bank, N.A., and J.P. Morgan Securities LLC (JPMS) (collectively, JPM)
  - swsieber 5y ago
    Because if these are trading actions that lead to these fines then a rational actor might decide against taking then in the future lest trading become a net negative.
  - gruez 5y ago
    > Why would I look at just their trading revenue? Why should you? Suppose you did a bad. Let's it was a side hustle where you took refurbished ipads and resold them as brand-new ipads. Over the past year you made $2000 in profit from doing so. The cops caught you doing it and fined you $10k. That sounds like a pretty serious penalty. However, you're also a bay area software engineer making $400k total comp, so $10k is a drop in the bucket. Should they fine you $200k instead, just because you happen to be a software engineer?

josephd79 5y ago

Facts.

fnordfnordfnord 5y ago

It's further enraging because people have been calling this out for years and mostly just been mocked and called conspiracy theorists for it.

rbarnes01 5y ago

"... including the highest restitution ($311,737,008), disgorgement ($172,034,790), and civil monetary penalty ($436,431,811) amounts in any spoofing case." Unless you are implying that JPM profited more than $172 million, the report suggests the government took the profits.

jbay808 5y ago
Is that penalty going to hit the people who were steering the ship at the time, who got big bonuses? Or is it only going to impact the bonuses of the people who are steering the ship today?
- missedthecue 5y ago
  The CEO of JPM between 2008 and 2016 (the time period in question) is the same CEO that is in charge today.

hogFeast 5y ago

Wrong. They returned the profits, and paid two fines on top of that.