Merrill Lynch Caught Criminally Manipulating Precious Metals Market ‘Thousands of Times’ over 6 Years
The comments below are an edited and abridged synopsis of an article by Tyler Durden
The CFTC has announced that Merrill Lynch Commodities (MLCI), a global commodities trading business, agreed to pay $25 million to resolve the government’s investigation into a multi-year scheme by MLCI precious metals traders to mislead the market for precious metals futures contracts traded on the COMEX.
As MLCI admitted, beginning in 2008 and continuing through 2014, precious metals traders employed by MLCI schemed to deceive other market participants by injecting materially false and misleading information into the precious metals futures market.
They placed fraudulent orders for precious metals futures contracts that they intended to cancel before execution, thereby spoofing (manipulating) the market by creating the false impression of increased supply or demand and, in turn, inducing other market participants to buy and sell futures contracts at quantities, prices and times that they otherwise likely would not have done. Over the relevant period, the traders placed thousands of fraudulent orders.
Since we are talking about a bank, and since banks are in charge of the DOJ, and virtually every other branch of government, not to mention the Fed, nobody will go to jail. MLCI entered into a non-prosecution agreement, and agreed to pay a measly $25 million in criminal fines, restitution and forfeiture of trading profits.
MLCI and its parent company, Bank of America, have agreed to cooperate with the government’s ongoing investigation of individuals and to report evidence or allegations of violations of the wire fraud statute, securities and commodities fraud statute, and anti-spoofing provision of the Commodity Exchange Act in BAC’s Global Markets’ Commodities Business, whose function is to conduct wholesale, principal trading and sales of commodities. Laughably, MLCI and BAC also agreed to enhance their existing compliance program and internal controls to ensure they are designed to detect and deter, among other things, manipulative conduct in BAC’s Global Markets Commodities Business.
Translation: It will be much more difficult to catch them manipulating the market next time.