Traders Beware: U.S. taps new tools to find fraud in volatile commodities market

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When the U.S. Department of Justice charged a handful of JP Morgan Chase & Co traders in 2018 and 2019 with alleged commodities futures manipulation, it wasn't the first time the government had probed the bank's metals trading activities.

) traders in 2018 and 2019 with alleged commodities futures manipulation, it wasn’t the first time the government had probed the bank’s metals trading activities.

Since then, leaps in the agencies’ data analysis capabilities have enabled them to detect and prosecute increasingly sophisticated forms of manipulation in the commodities futures markets which for decades have gone under-surveilled, according to ten officials and industry experts. The unit is part of a broader Justice Department initiative to dramatically expand the scope of market manipulation the agency targets for criminal prosecutions, beyond traditional insider trading and futures manipulation into a range of asset classes, sources told Reuters.

“There is just a wealth of information there, which is going to give us years and years of cases to come, I would expect,” Robert Zink, chief of the Justice Department’s fraud section, a unit of the agency’s criminal division, said of the data in an interview. As seasoned prosecutors of healthcare fraud, the team believed they could apply the tools they had used to build those cases to the futures markets. That project began as an experiment in combing government data to sniff out suspicious patterns, such as doctors repeatedly overbilling hours, and has led the agency to bring charges against over 4,200 defendants, Justice Department data show.

 

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‘Traders’ are people making legitimate trades. ‘Criminals’ are people intentionally making malicious trades. The tweet should say “criminals beware...”

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Great, as expected Reuters is first to warn fraudsters!!!!!

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