Bank of America unit to pay $5.56 million to settle DOJ case on market manipulation.

Bank of America’s securities division has reached a resolution with the Department of Justice, agreeing to pay $5.56 million regarding allegations of market manipulation by former employees. The settlement includes a $3.6 million contribution to a victim compensation fund and a $1.96 million disgorgement of ill-gotten gains. The bank will not face prosecution for these actions, which involved spoof orders in the US Treasuries secondary market from 2014 to 2020.

The investigation revealed that two traders from Bank of America’s U.S. Treasuries desk engaged in manipulative activities in the secondary market during the specified timeframe. One of the traders was also found to have manipulated the futures market through spoof orders. The bank’s cooperation in the investigation, coupled with its voluntary self-disclosure of the misconduct, led to the resolution of the case.

Following the discovery of the wrongdoing, Bank of America took swift action by terminating the junior trader involved and enhancing its surveillance programs to prevent future occurrences of market manipulation. This proactive approach to addressing the issue demonstrates the bank’s commitment to regulatory compliance and maintaining market integrity.

The settlement with the Department of Justice serves as a crucial milestone in combating market manipulation within the financial sector. It serves as a reminder of the importance of adhering to regulatory standards and the repercussions that non-compliance can have on market stability and investor confidence. Investors are advised to remain vigilant in light of such incidents to safeguard their interests and ensure transparency in the financial markets.