U.S. authorities reached a deal with BofA Securities Inc. to resolve an investigation into the firm’s oversight of traders that allegedly engaged in market manipulation involving U.S. Treasuries and futures.
Under the deal, the U.S. Department of Justice will not prosecute the firm, which agreed to disgorge about US$1.96 million and pay about $3.6 million into a victim compensation fund that it will establish and administer.
The settlement stems from an investigation into alleged market manipulation involving traders on the bank’s Treasuries desk.
Between November 2014 and April 2020, the traders “separately engaged” in alleged spoofing schemes — entering orders without intending to fill them — to manipulate the cash market. One trader also allegedly manipulated the futures market for U.S. Treasuries.
The DoJ said it settled with the firm based on factors including its voluntary self-disclosure of the misconduct, proactive cooperation and remediation efforts, which included firing a junior trader, reviewing its compliance program and internal controls and investing in stronger compliance.
It also cited the firm’s agreement to disgorge its gains and provide compensation to victims.
In 2023, the firm was sanctioned in a settlement with the U.S. Financial Industry Regulatory Authority Inc. (FINRA), which fined it US$24 million for alleged supervisory failures involving the traders. The firm settled without admitting or denying the allegations.
One trader, Tyler Forbes, pled guilty to one count of manipulation of securities prices in 2022. He was sentenced to time served, followed by two years of supervised release, and ordered to pay US$15,000. Forbes was also sanctioned in a settlement with FINRA, which imposed a 16-month suspension and fined him US$75,000.