JPMorgan Probe Revived by Regulators’ Data Mining
A $920 million fine against bank shows advances in analyzing trading data
WASHINGTON—Investigators probing whether traders at JPMorgan Chase JPM +1.50% & Co. rigged silver prices seven years ago decided there was no case to bring. Last week, the same agency hammered the megabank with a $920 million fine.
How a small agency that once walked away from an investigation of price manipulation, only to later impose its biggest fine yet for the conduct, shows the advances government has made in using data to uncover market manipulation, said James McDonald, enforcement director of the Commodity Futures Trading Commission.
“We could not have brought the JPMorgan case without the data analytics program we have now,” said Mr. McDonald, who will step down as director this week after more than three years in the post.
The data needed to uncover the eight-year market manipulation scheme came from Chicago-based CME Group Inc., CME +1.16% the operator of exchanges including one that offers trading in gold and silver futures. The volume of data—including trades, orders and other messages flooding into CME’s computers—is so massive the CFTC couldn’t store or use it when Mr. McDonald began seeking it in 2017, he said.
Five years of CME trading data for precious-metals futures amounts to 1.7 terabytes, or 127 million pages, of information, according to testimony in a recent trial that resulted in the conviction of two former Deutsche Bank AG traders on fraud charges related to spoofing.