In re J.P. Morgan Securities LLC

 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES ACT OF 1933 
Release No. 10858 / September 29, 2020 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 90035 / September 29, 2020 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-20094 
 
 
In the Matter of 
 
J.P. Morgan Securities LLC, 
 
Respondent. 
 
ORDER INSTITUTING 
ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 8A OF THE SECURITIES ACT 
OF 1933 AND SECTION 15(b) OF THE 
SECURITIES EXCHANGE ACT OF 1934, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER 
   
 
I.  
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public administrative and cease-and-desist proceedings be, and hereby are, 
instituted pursuant to Sect io n 8A of the Securities Act of 1933 (“Securities Act”) and Section 15(b) 
of the Securit ies Exchange Act of 1934 (“Exchange Act”) against J.P. Morgan Securities LLC 
(“JPMS” or “Respondent”).  
 
II.  
 
In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (“Offer”) that the Commission has determined to accept.  Respondent admits the 
facts set forth in Section III below, acknowledges that its   conduct violated the federal securities 
laws, admits the Commission’s jurisdiction over it and the subject matter of these proceedings, and 
consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings 
Pursuant to Sect io n 8A of the Securities Act of 1933 and Section 15(b) of the Securities Exchange 
Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order 
(“Order”), as set forth below.  
 

 2 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds that: 
 
Summary 
 
1. Between April 2015 and January 2016 (the “Relevant Per iod”), certain traders 
(“Traders”) on the U.S. Treasuries trading desk at    JPMS (the “JPMS Treasuries Desk”) engaged in 
manipulat ive trading of U.S. Treasury (“Treasury”) cash securities in the secondary market.  Over 
the course of the Relevant Per iod, the JPMS Treasuries Desk Traders engaged in hundreds of 
manipulat ive trading “events” that generally involved placing bona fide or genuine orders to buy or 
sell a particular Treasury security on one side of the market, while simultaneously or nearly 
simultaneously placing multiple, layered orders on the opposite side of the market to sell or buy that 
particular Treasury security, which the Trader did not intend to execute (“non-bona fide” or 
“deceptive” orders), in order to create a false appearance of buy or sell interest.   
 
2. The JPMS Treasuries Desk Traders entered these non-bona fide orders to induce 
other market participants to trade against JPMS’s bona fide orders on the opposite side of the 
market at    favorable prices or prices that were artificially raised or artificially depressed by the non-
bona fide orders.  After securing beneficially priced executions for their bona fide orders, the JPMS 
Treasuries Desk Traders typically canceled the non-bona fide orders.  During the Relevant Period, 
this manipulative trading scheme operated as a fraud or deceit on numerous other market 
participants and resulted in the generation of illicit profits to JPMS. 
 
Respondent 
 
3.  JPMS, a Delaware limited liability company headquartered in New York, New 
York, is registered with the Commission as a broker-dealer and an investment adviser.  It   is a 
wholly-owned subsidiary of JPMorgan Chase & Co., a global financial services firm incorporated in 
Delaware and headquartered in New York, New York. 
 
Background 
 
4. Beginning as early as February 2009 and continuing through early January 2016, 
Traders on the JPMS Treasuries Desk who traded Treasury cash securities, including various 
tenors of bills, notes, and bonds, and Treasury futures engaged in manipulative trading in the U.S. 
Treasury cash and futures secondary markets.  Generally, in the course of principal trading, 
Traders placed numerous non-bona fide orders on one side of the market for a particular Treasury 
instrument – i.e., orders they never intended to execute – in order to create a false impression of 
buy or sell interest in that instrument that would raise or depress prices and allo w the Traders to 
obtain opposite-side executions on bona fide orders at more favorable prices than would have 
otherwise been possible.  After securing beneficially priced   executions, the Traders would typically 
cancel the non-bona fide orders.   
 
5. This manipulative trading was conducted on the secondary market, where 
institutional and other market participants trade Treasury securities through electronic trading 

 3 
platforms.  The JPMS Treasuries Desk Traders typically placed manipulative trades through a 
single electronic trading platform where they placed both the non-bona fide and genuine bids.  In 
some instances, Traders engaged in manipulative trading across two electronic cash trading 
platforms, with a trader placing genuine orders on one platform and deceptive orders on the 
opposite side of the market on a different platform. 
   
6. During the Relevant Period, Traders on the JPMS Treasuries Desk conducted 
hundreds of manipulative trading events in the Treasury cash market across different tenors of 
Treasury securities that did, or would, operate as a fraud or deceit upon other purchasers in the 
Treasury cash market. 
 
7. For example, on May 20, 2015, JPMS Treasuries Desk Trader 1 placed a sell order 
for one (1) lot of the 30-Year Treasury Bond at    a best ask price of $98.921875.  After not being 
filled, the order was modified to a two (lot) limit order placed such that only an order of one (1) lot 
was publicly visible to other market participants (i.e., an “iceberg” order).  When the order was still 
not filled approximately ten seconds later, the trader placed an opposing non-bona fide order to buy 
ten (10) lots of the same series of Treasury Bond at an above best bid price of $98.90625.  One 
second later, the order to sell was executed at    the favorable best ask price.  Two seconds later, the 
trader canceled the non-bona fide buy order. 
 
8. A similar event occurred on July 29, 2015, when JPMS Treasuries Desk Trader 2 
placed an iceberg buy order for twenty-five (25) lots of the 5-Year Treasury Note at the best bid 
price of $100.0703125, showing ten (10) lots to the market.  After nearly a minute with no 
opposing offer to fill the buy order, the trader placed a series of non-bona fide sell orders for the 
same series of Treasury Note at three different price levels above the best ask price, at    prices 
between $100.1015625 and $100.0859375, while increasing order quantity.  Eight seconds after 
the placement of the first non-bona fide sell order, the order to buy was filled.  Two seconds after 
execution of the buy order at the favorable best bid price, the trader cancelled all of the non-bona 
fide sell orders. 
 
9. The same manipulative strategy was employed in trading of the 30-Year Treasury 
Bond on January 7, 2016.  On that occasion, JPMS Treasuries Desk Trader 2 placed an iceberg 
order to sell five (5) lots of the 30-Year Treasury Bond, with just one (1) lot displayed to other 
market participants, at a best ask price of $100.671875.  After the order stood for approximately 37 
seconds in the market without executing, the trader placed a series of eighteen (18) non-bona fide 
buy orders, each for one (1) lot of the same series of Treasury Bond, at seven increasingly higher 
price levels between $100.546875 and $100.640625, creating the false appearance of increased buy 
interest in the market.  Almost immediately after placing these orders to buy, the market mid-price 
(i.e., the average between the best bid offer and the best ask offer) increased and the trader’s offer 
to sell was fully executed at the favorable best ask price.  Less than ten seconds later, the trader 
canceled all of the opposing non-bona fide orders to buy. 
 
10. This manipulative conduct ceased in early January 2016, when certain personnel 
changes were made on the JPMS Treasuries Desk.  Up until that time, certain JPMS Treasuries 
Desk Traders continued to employ a manipulative order strategy in an attempt to manipulate the 
Treasury securities market.   

 4 
 
11. The manipulative trading undertaken by the Traders on the JPMS Treasuries Desk 
violated JPMS policies and procedures that were in    effect during the Relevant Period.  The 
company’s anti-fraud and anti-manipulation policy and guidelines on appropriate trading that were 
in operation during the Relevant Period, as well as compliance bulletins regarding spoofing, 
layering, and other manipulative trading practices issued in July 2013 and December 2015  , all   
specifically prohibited the manipulative trading techniques described herein. 
 
12. JPMS profited from the above-described conduct by executing buy orders for 
Treasury securities at lower prices, or sell orders for Treasury securities at higher prices, than it 
otherwise would have secured absent the JPMS Treasuries Desk Traders’ manipulative trading.   
 
13. As a result of this conduct, JPMS willfully
1
 violated Section 17(a)(3) of the 
Securities Act, which prohibits any person, in the offer or sale of securities, from engaging in any 
transaction, practice, or course of business which operates or would operate as a fraud or deceit 
upon the purchaser.   
 
IV.  
 
 In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Respondent JPMS’ Offer. 
 
 Accordingly, pursuant to Section 8A of the Securities Act and Section 15(b) of the 
Exchange Act, it is hereby ORDERED that: 
 
A. Respondent JPMS cease and desist from committing or causing any violations and 
any future violations of Section 17(a)(3) of the Securities Act.  
 
B. Respondent JPMS is censured. 
 
C. Respondent JPMS shall, within fourteen (14) days of the entry of this Order, pay 
disgorgement of $10,000,000 to the Securities and Exchange Commission.  If timely payment of 
disgorgement is not made, additional interest shall accrue pursuant to SEC Rule of Practice 600.   
 
D. Respondent JPMS shall, within fourteen (14) days of the entry of this Order, pay a 
civil penalty in the amount of $25,000,000 to the Securities and Exchange Commission.  Said 
penalty shall be offset in an amount equal to the penalty imposed in In the Matter of JPMorgan 
Chase & Co.; JPMorgan Chase Bank, N.A.; and J.P. Morgan Securities LLC, CFTC Docket No. 
20-69.  If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717. 
 
Payment must be made in one of the following ways:   
 
                                                
1
 “Willfully,” for purposes of imposing relief under Section 15(b) of the Exchange Act, “‘means no more than that 
the person charged with the duty knows what he is doing.’”  Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) 
(quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)).  There is no requirement that the actor “also be aware 
that he is violating one of the Rules or Acts.”  Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965). 

 5 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm
; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying J.P. 
Morgan Securities LLC as a Respondent in these proceedings, and the file number of these 
proceedings; a copy of the cover letter and check or money order must be sent to Sanjay Wadhwa, 
Senior Associate Regional Director, Division of Enforcement, Securities and Exchange 
Commission, Brookfield Place, 200 Vesey Street, Suite 400, New York, New York, 10281. 
 
 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
        Secretary   
 

UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES ACT OF 1933 
Release No. 10858 / September 29, 2020 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 90035 / September 29, 2020 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-20094 
 
 
In the Matter of 
 

J.P. Morgan Securities LLC, 
 
Respondent. 
 

ORDER INSTITUTING 
ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 8A OF THE SECURITIES ACT 
OF 1933 AND SECTION 15(b) OF THE 
SECURITIES EXCHANGE ACT OF 1934, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER 

   
 

I.  
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public administrative and cease-and-desist proceedings be, and hereby are, 
instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”) and Section 15(b) 
of the Securities Exchange Act of 1934 (“Exchange Act”) against J.P. Morgan Securities LLC 
(“JPMS” or “Respondent”).  

 
II.  

 
In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (“Offer”) that the Commission has determined to accept.  Respondent admits the 
facts set forth in Section III below, acknowledges that its conduct violated the federal securities 
laws, admits the Commission’s jurisdiction over it and the subject matter of these proceedings, and 
consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings 
Pursuant to Section 8A of the Securities Act of 1933 and Section 15(b) of the Securities Exchange 
Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order 
(“Order”), as set forth below.  

 



 2 

III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds that: 
 

Summary 
 

1. Between April 2015 and January 2016 (the “Relevant Period”), certain traders 
(“Traders”) on the U.S. Treasuries trading desk at JPMS (the “JPMS Treasuries Desk”) engaged in 
manipulative trading of U.S. Treasury (“Treasury”) cash securities in the secondary market.  Over 
the course of the Relevant Period, the JPMS Treasuries Desk Traders engaged in hundreds of 
manipulative trading “events” that generally involved placing bona fide or genuine orders to buy or 
sell a particular Treasury security on one side of the market, while simultaneously or nearly 
simultaneously placing multiple, layered orders on the opposite side of the market to sell or buy that 
particular Treasury security, which the Trader did not intend to execute (“non-bona fide” or 
“deceptive” orders), in order to create a false appearance of buy or sell interest.   

 
2. The JPMS Treasuries Desk Traders entered these non-bona fide orders to induce 

other market participants to trade against JPMS’s bona fide orders on the opposite side of the 
market at favorable prices or prices that were artificially raised or artificially depressed by the non-
bona fide orders.  After securing beneficially priced executions for their bona fide orders, the JPMS 
Treasuries Desk Traders typically canceled the non-bona fide orders.  During the Relevant Period, 
this manipulative trading scheme operated as a fraud or deceit on numerous other market 
participants and resulted in the generation of illicit profits to JPMS. 
 

Respondent 
 

3.  JPMS, a Delaware limited liability company headquartered in New York, New 
York, is registered with the Commission as a broker-dealer and an investment adviser.  It is a 
wholly-owned subsidiary of JPMorgan Chase & Co., a global financial services firm incorporated in 
Delaware and headquartered in New York, New York. 

 
Background 

 
4. Beginning as early as February 2009 and continuing through early January 2016, 

Traders on the JPMS Treasuries Desk who traded Treasury cash securities, including various 
tenors of bills, notes, and bonds, and Treasury futures engaged in manipulative trading in the U.S. 
Treasury cash and futures secondary markets.  Generally, in the course of principal trading, 
Traders placed numerous non-bona fide orders on one side of the market for a particular Treasury 
instrument – i.e., orders they never intended to execute – in order to create a false impression of 
buy or sell interest in that instrument that would raise or depress prices and allow the Traders to 
obtain opposite-side executions on bona fide orders at more favorable prices than would have 
otherwise been possible.  After securing beneficially priced executions, the Traders would typically 
cancel the non-bona fide orders.   

 
5. This manipulative trading was conducted on the secondary market, where 

institutional and other market participants trade Treasury securities through electronic trading 



 3 

platforms.  The JPMS Treasuries Desk Traders typically placed manipulative trades through a 
single electronic trading platform where they placed both the non-bona fide and genuine bids.  In 
some instances, Traders engaged in manipulative trading across two electronic cash trading 
platforms, with a trader placing genuine orders on one platform and deceptive orders on the 
opposite side of the market on a different platform. 

   
6. During the Relevant Period, Traders on the JPMS Treasuries Desk conducted 

hundreds of manipulative trading events in the Treasury cash market across different tenors of 
Treasury securities that did, or would, operate as a fraud or deceit upon other purchasers in the 
Treasury cash market. 

 
7. For example, on May 20, 2015, JPMS Treasuries Desk Trader 1 placed a sell order 

for one (1) lot of the 30-Year Treasury Bond at a best ask price of $98.921875.  After not being 
filled, the order was modified to a two (lot) limit order placed such that only an order of one (1) lot 
was publicly visible to other market participants (i.e., an “iceberg” order).  When the order was still 
not filled approximately ten seconds later, the trader placed an opposing non-bona fide order to buy 
ten (10) lots of the same series of Treasury Bond at an above best bid price of $98.90625.  One 
second later, the order to sell was executed at the favorable best ask price.  Two seconds later, the 
trader canceled the non-bona fide buy order. 

 
8. A similar event occurred on July 29, 2015, when JPMS Treasuries Desk Trader 2 

placed an iceberg buy order for twenty-five (25) lots of the 5-Year Treasury Note at the best bid 
price of $100.0703125, showing ten (10) lots to the market.  After nearly a minute with no 
opposing offer to fill the buy order, the trader placed a series of non-bona fide sell orders for the 
same series of Treasury Note at three different price levels above the best ask price, at prices 
between $100.1015625 and $100.0859375, while increasing order quantity.  Eight seconds after 
the placement of the first non-bona fide sell order, the order to buy was filled.  Two seconds after 
execution of the buy order at the favorable best bid price, the trader cancelled all of the non-bona 
fide sell orders. 

 
9. The same manipulative strategy was employed in trading of the 30-Year Treasury 

Bond on January 7, 2016.  On that occasion, JPMS Treasuries Desk Trader 2 placed an iceberg 
order to sell five (5) lots of the 30-Year Treasury Bond, with just one (1) lot displayed to other 
market participants, at a best ask price of $100.671875.  After the order stood for approximately 37 
seconds in the market without executing, the trader placed a series of eighteen (18) non-bona fide 
buy orders, each for one (1) lot of the same series of Treasury Bond, at seven increasingly higher 
price levels between $100.546875 and $100.640625, creating the false appearance of increased buy 
interest in the market.  Almost immediately after placing these orders to buy, the market mid-price 
(i.e., the average between the best bid offer and the best ask offer) increased and the trader’s offer 
to sell was fully executed at the favorable best ask price.  Less than ten seconds later, the trader 
canceled all of the opposing non-bona fide orders to buy. 

 
10. This manipulative conduct ceased in early January 2016, when certain personnel 

changes were made on the JPMS Treasuries Desk.  Up until that time, certain JPMS Treasuries 
Desk Traders continued to employ a manipulative order strategy in an attempt to manipulate the 
Treasury securities market.   



 4 

 
11. The manipulative trading undertaken by the Traders on the JPMS Treasuries Desk 

violated JPMS policies and procedures that were in effect during the Relevant Period.  The 
company’s anti-fraud and anti-manipulation policy and guidelines on appropriate trading that were 
in operation during the Relevant Period, as well as compliance bulletins regarding spoofing, 
layering, and other manipulative trading practices issued in July 2013 and December 2015, all 
specifically prohibited the manipulative trading techniques described herein. 
 

12. JPMS profited from the above-described conduct by executing buy orders for 
Treasury securities at lower prices, or sell orders for Treasury securities at higher prices, than it 
otherwise would have secured absent the JPMS Treasuries Desk Traders’ manipulative trading.   

 
13. As a result of this conduct, JPMS willfully1 violated Section 17(a)(3) of the 

Securities Act, which prohibits any person, in the offer or sale of securities, from engaging in any 
transaction, practice, or course of business which operates or would operate as a fraud or deceit 
upon the purchaser.   

 
IV.  

 
 In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Respondent JPMS’ Offer. 
 
 Accordingly, pursuant to Section 8A of the Securities Act and Section 15(b) of the 
Exchange Act, it is hereby ORDERED that: 
 

A. Respondent JPMS cease and desist from committing or causing any violations and 
any future violations of Section 17(a)(3) of the Securities Act.  
 

B. Respondent JPMS is censured. 
 
C. Respondent JPMS shall, within fourteen (14) days of the entry of this Order, pay 

disgorgement of $10,000,000 to the Securities and Exchange Commission.  If timely payment of 
disgorgement is not made, additional interest shall accrue pursuant to SEC Rule of Practice 600.   

 
D. Respondent JPMS shall, within fourteen (14) days of the entry of this Order, pay a 

civil penalty in the amount of $25,000,000 to the Securities and Exchange Commission.  Said 
penalty shall be offset in an amount equal to the penalty imposed in In the Matter of JPMorgan 
Chase & Co.; JPMorgan Chase Bank, N.A.; and J.P. Morgan Securities LLC, CFTC Docket No. 
20-69.  If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717. 

 
Payment must be made in one of the following ways:   

 

                                                
1 “Willfully,” for purposes of imposing relief under Section 15(b) of the Exchange Act, “‘means no more than that 
the person charged with the duty knows what he is doing.’”  Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) 
(quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)).  There is no requirement that the actor “also be aware 
that he is violating one of the Rules or Acts.”  Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965). 



 5 

(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  

 
(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  

 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 

 
Payments by check or money order must be accompanied by a cover letter identifying J.P. 

Morgan Securities LLC as a Respondent in these proceedings, and the file number of these 
proceedings; a copy of the cover letter and check or money order must be sent to Sanjay Wadhwa, 
Senior Associate Regional Director, Division of Enforcement, Securities and Exchange 
Commission, Brookfield Place, 200 Vesey Street, Suite 400, New York, New York, 10281. 
 
 

 
 By the Commission. 
 
 
 

Vanessa A. Countryman 
        Secretary   
 

http://www.sec.gov/about/offices/ofm.htm

	UNITED STATES OF AMERICA
	In the Matter of
	J.P. Morgan Securities LLC,
	Respondent.
	Respondent
	Background
	IV.