Bank of America Securities settles investigation into U.S. market manipulation without facing charges

BofA Securities has reached an agreement with the U.S. Justice Department to settle an investigation into allegations of market manipulation by two former traders, thereby avoiding prosecution under the department’s Corporate Enforcement and Voluntary Self-Disclosure Policy.

As part of the resolution, the bank will forfeit $1.96 million and contribute approximately $3.6 million to a victim compensation fund. The investigation centered on activities conducted between November 2014 and April 2020, during which two traders from BofA’s U.S. Treasuries desk engaged in manipulation of the secondary market. Additionally, one of the traders placed over 1,000 “spoof” orders in the U.S. Treasuries futures market, a common practice involving the placement of deceptive orders to influence market prices.

Tyler Forbes, one of the traders involved, pleaded guilty in April 2022 to charges related to manipulating Treasury prices. Despite these actions, the Justice Department acknowledged BofA’s voluntary disclosure, cooperation, and efforts towards remediation. The bank took steps such as terminating the trader implicated in the manipulation, conducting a thorough review of trading on its Treasuries desk, enhancing surveillance and compliance systems, and subjecting internal controls to external testing.

It is important to note that the allegations settled in this case do not equate to an admission of liability on the part of BofA Securities. The settlement represents a resolution that allows the bank to avoid prosecution in connection with the market manipulation probe.

This agreement between BofA Securities and the U.S. Justice Department underscores the significance of transparency, cooperation, and accountability within the financial industry. By voluntarily disclosing the misconduct, cooperating with investigators, and implementing measures to address the issues, BofA has taken steps to demonstrate its commitment to ethical conduct and regulatory compliance.

Moving forward, BofA Securities will likely continue to prioritize adherence to regulations, internal controls, and ethical standards to uphold the integrity of its operations and safeguard against potential instances of misconduct within its trading activities. The resolution of this investigation serves as a reminder of the importance of maintaining vigilance and oversight in financial markets to prevent and address instances of market manipulation effectively.