U.S. taps new tools to find fraud in volatile commodities market

Section:

Why not just call the trading room of the Federal Reserve Bank of New York and the Treasury Department's Exchange Stabilization Fund?

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By Chris Prentice
Reuters
Thursday, May 21, 2020

WASHINGTON -- When the U.S. Department of Justice charged a handful of JP Morgan Chase & Co. traders in 2018 and 2019 with commodities futures manipulation, it wasn't the first time the government had probed the bank's metals trading activities.

The Commodity Futures Trading Commission (CFTC) investigated the same business as part of a similar probe of the silver market years earlier, but it was not able to build a case with the data it had at the time, according to U.S. court filings and a person with knowledge of the aborted probe.

... Dispatch continues below ...


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Since then, leaps in the agencies' data analysis capabilities have enabled them to detect and prosecute increasingly sophisticated forms of manipulation in the commodities futures markets which for decades have gone under-surveilled, according to ten officials and industry experts.

The Justice Department fraud division is beefing up with the creation of a sub-unit specializing in combating commodities fraud overseen by Avi Perry, a trial attorney who has prosecuted high-profile cases involving trading powerhouse Tower Research Capital, Merrill Lynch Commodities Inc., and the ongoing JPMorgan probe, according to two sources.

The unit is also hiring a handful of additional trial attorneys, according to the sources and online job postings. A Justice Department spokesman said the agency intends to fill the positions "promptly."

The unit is part of a broader Justice Department initiative to dramatically expand the scope of market manipulation the agency targets for criminal prosecutions, beyond traditional insider trading and futures manipulation into a range of asset classes, sources told Reuters.

... For the remainder of the report:

https://www.reuters.com/article/us-usa-doj-trading-insight/traders-bewar...

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