By PAUL O’DONOGHUE, Senior Correspondent
BANK of America Securities has paid $5.56 million to settle a US Department of Justice (DOJ) investigation into alleged market manipulation by former employees.
The company will contribute $3.6 million to a victim compensation fund it will establish and administer. Additionally, it will repay “approximately $1.96 million” in ill-gotten gains, the DOJ said.
In exchange, the DOJ said it has “declined to prosecute BoAS [Bank of America Securities]”.
The case centers on two former BoAS employees. They allegedly placed phony “spoof” trades to try to influence the U.S. Treasuries market.
Spoofing involves placing orders traders intend to cancel. Traders hope to create a false sense of market activity that moves prices in a direction they favor.
This “artificially raise or depress the prevailing market price”, the DOJ said. The former traders could then execute their genuine orders “more easily or more profitably”.
Bank of America Securities probe
In 2023, the Financial Industry Regulatory Authority fined Bank of America $24 million by for the same case.
The Justice Department’s investigation found evidence that from November 2014 through April 2020. Two former BofA Securities traders engaged in a scheme to manipulate the futures market for U.S. Treasuries by entering spoof orders, the DOJ said.
“Collectively, these two former employees entered more than one thousand suspected spoof orders during the relevant time period,” it said.
One of the traders, Tyler Forbes, pleaded guilty in April 2022 to related charges. He was sentenced to time served and a $15,000 fine.
The bank declined to comment.
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