Settlement reached in JPMorgan treasury futures spoofing case
Several months after the parties in the JPMorgan treasury futures spoofing case reported progress towards settlement, an agreement to resolve the lawsuit has been reached. This becomes clear from a status update provided to the New York Southern District Court on May 26, 2021.
Let’s recall that this action has been brought by a class encompassing:
“All persons or entities who transacted in Treasury Futures or options on Treasury Futures traded on a United States exchange during the period January 1, 2009 through the present (the “Class Period”), where such persons or entities were domiciled in the United States or its territories. Excluded from the Class are the Defendants and any parent, subsidiary, affiliate, employee, agent or co- conspirator of any Defendant.”
The plaintiffs accuse JP Morgan Chase & Co., JP Morgan Clearing Corp., and JP Morgan Securities LLC, of unlawful and intentional manipulation of U.S. Treasury futures contracts and options on those contracts that trade on United States-based exchanges.
In particular, the defendants are accused of having perpetrated a sophisticated manipulative scheme in which they injected materially false and illegitimate signals of supply and demand into the Treasury Futures market in order to:
- induce other market participants to trade against Defendants’ genuine orders (i.e., orders that Defendants did want to execute) on the opposite side of the market from the spoof orders at prices, quantities, and times at which Plaintiff and other market participants otherwise would not have traded, and
- financially benefit the defendants.
The complaint stated that the defendants routinely placed electronic orders to buy and sell Treasury Futures with the intent to cancel those orders before execution to make profits and avoid losses.
The defendants’ spoofing allegedly had effects in markets above and beyond those for Treasury Futures and options on those futures, as both algorithmic traders and others consider prices for Treasury Futures in assessing other investment products.
Today, the parties in this case said that they continued their mediation efforts and confirm that they this week entered into a binding, confidential term sheet that contains an agreement in principle to resolve this action. The confidential term sheet, executed May 25, includes an agreement to negotiate, finalize, and file formal settlement documents within 90 days. If approved by the Court, the settlement will resolve this action in its entirety.
As a result, the parties request that the Court suspend existing case deadlines to enable the parties to finalize and file a motion for preliminary approval of the settlement on or before August 23, 2021.