Bank of America pays $5.56 million for market manipulation!

Bank of America pays $5.56 million for market manipulation!

Bank of America (BofA) has settled with the US Department of Justice (DOJ) in a market manipulation case and will pay $5.56 million in restitution and compensation. This agreement ends a criminal investigation involving alleged market manipulation by BofA Securities, Inc Daily Hodl reported.

The allegations against the bank concerned the conduct of two traders at BofA Securities' U.S. Treasury division who manipulated the secondary market from 2014 to 2020. A trader, Tyler Forbes, had also manipulated the futures market by placing thousands of so-called spoof transactions - orders entered with no intention of being executed. Forbes pleaded guilty in 2022 to manipulating the prices of U.S. Treasury bonds and was sentenced to a prison sentence of time already served plus two years of probation.

Market manipulation strategies

Forbes used a strategy where he placed large spoof orders to create the appearance of market depth while simultaneously executing real smaller orders on the opposite side. Through this approach, he artificially influenced the price levels in the market, which allowed him to profit from his real transactions. Forbes faced a possible sentence of up to 20 years in prison, underscoring the seriousness of the charges.

The settlement payment will be used to compensate victims of market distortions and raises a clear message that regulators are cracking down on market manipulation in the financial sector. Bank of America has expressed its commitment to compliance standards and ethical behavior.

This decision opens a further chapter in the discussion about the integrity of the financial markets. Investors and industry experts are watching closely to see how regulators will handle similar incidents and what measures will continue to be taken to address unfair practices.