“This action sends the important message that if you engage in manipulative and deceptive trade practices you will be caught, punished, and forced to give up your ill-gotten gains,” added Division of Enforcement Director James McDonald.
No, Mr McDonald, it's quite the opposite. The important message is that if your organization can keep the profits from criminal activities higher than the penalties, they can perpetuate it. That's because there are virtually no other consequences for any individual criminals personally responsible for this, and none of them was persecuted, punished and forced to give up his ill-gotten gains.
Executives needs to get jail time. But then they’ll just lobby for a new facility to be built in Aspen and for skiing to become part of the rehabilitation program.
It’s crazy. If one tried to steal 10k from the bank, you would go to jail. If you steal millions through illegal trade practices, you just pay a fraction of what you stole.
Its not very different from the Flash crash, in 2015 an independent trainer named Navinder Singh Sarao was sued for manipulating the market, he was creating a lot of orders and cancelling them tricking the flash trading computers to push up the prices, he made around 45 million in the process while living in his parent house. In 2020 he was convicted with a year of confinement at home, no jail time, and a trading ban.
So yeah also not the biggest punishment, but more then what these bankers got, they are still allowed to trade and no confinement.
Whether he was the only one to do it and whether he was the main cause of crash is not clear, but at least he had a part.
I personally feel like if you allow flash trading to have such an advantage over investors without those means it shouldn't be illegal to exploit it, but anyway.
One, there is no question that Sarao had nothing to do with the flash crash. The cause of the flash crash was a fund manager adding an extra zero to a trade they were making. The reason Sarao was blamed was to put pressure on him, and because the SEC needed to blame someone for there total failure to properly manage markets (the person who prosecuted the case against Sarao was the person responsible for monitoring electronic trading, she built a huge media profile through this case...no-one ever asked why the only person they charged for this was a disabled guy working out of his parent's bedroom).
Two, Sarao did go to jail in the US and the UK. This in itself was pretty unusual because he admitted to the crime, the crime had never been charged criminally, he explained to prosecutors exactly what he was doing, and he had relatively severe mental health problems which (given that he was totally compliant with prosecutors) should have meant he was never extradited (I believe he was in jail in Chicago, and he became very unwell whilst there). He was extradited to the US because prosecutors wanted to see him suffer (this is also why their first contact was a dawn raid on his parent's house), and it worked because he ended up signing a plea deal for something that he was very unlikely to actually get found guilty for (the case went on for something like 10 years).
Three, the reason why Sarao was charged was because people at HFT firms were losing money due to spoofing. That was it. The person who notified the SEC worked at an HFT firm. Ironically, Sarao himself also attempted to notify the SEC about things HFT firms were doing...nothing happened with that.
Four, people have been spoofing for decades. When markets were still a mix of open outcry and electronic, the largest traders were all spoofers. Saying that spoofing is illegal relies on the notion that once you enter an order, you must have the intention of trading at that price...do you know how to measure intention? The practice was only made illegal when the market went full electronic, and the order book data was being used by HFT firms.
Five, the reason why Sarao didn't go to jail was because the case against him made no sense. He was spoofing, spoofing is illegal but when the SEC raided him (again, highly unusual) he thought that the SEC was actually investigating his previous communications about HFT firms...it wasn't. He gave huge amounts of information to prosecutors about what large firms were doing, apparently he sat them down and went through hours of examples of market manipulation...no cases were brought as a result of this.
Sarao is the archetypal of example who was forced to serve real time at the behest of HFT firms in order to further political aims.
This. Even if someone is not convinced that this guy had nothing to do with the crash, think about the alternative. An individual, living in a parent's house with everyday equipment, can crash a trillion-dollar market in a couple of minutes. What would that say about the stability/security of that market?
The story I remember was a popular documentary which had a story arch of a single trader single breaking the market from his parents bedroom. Which is a good story but most likely just a small part of the truth; also probably why the Wikipedia just mentions him shortly.
Bloomberg had a video about this, one of their journalists wrote a book about him. The conclusion of that book was that Sarao didn't break the markets, and it was probably not necessary to throw the book at someone who was mentally disabled because some incompetent prosecutors needed a scapegoat. If you only read about Sarao within the context of the Flash crash, you will get the wrong idea.
Personally, I treat documentaries as entertainment. They can be informative, but I usually only pay attention to the finer details they provide proof for. Any kind of arch or narrative I remain skeptical on.
Even if they had exactly the same outcome, one is theft the other is simply breaking the rules.
It's a bit like killing a person using a gun and killing a person as a result of driving like the rules don't apply to you. Once it is established that you did the act, the first one undoubtedly puts you in jail for a very long time no matter who you are and the second one may get you a fine and no jail time so that no harm is made to your career(like the Qatari royal who killed a pedestrian in London).
Even though what you are saying is techically correct and the reason why things work this way I wish they didn’t. I would argue that since there was intent with the action and there were victims it should be considered a criminal case rather than just breaking the rules. The victims in this case being everyone losing money during a scheme like this.
The likeness of this towards accidently killing someone while breaking the rules for driving falls apart using this reasoning as well since in that case the intent isn’t to kill anyone. In the scenerio comparing this however to bank robbery both cases have the intent to get money.
Actually you are right, they apparently did the spoofing with the intent to deceive specific traders so that the traders take action on this false information.
The car analogy would have been accurate if they did what they did without a specific target.
Actually, this isn't necessarily true. Example regarding the college admission scandal that demonstrates that just because a dollar wasn't "stolen", something of value was.
The admissions slots were stolen from the colleges and resold on the black market. Which is a crime, for good reason. We don’t have to act like there wasn’t a legal, primary market for the admissions slots already.
I think the key is not to understand this as a crime against other applicants, or the public, or “fairness.” It’s a crime against the schools.
The back door—“institutional advancement,” i.e., giving colleges tons of money—is fine, not because it is “fair,” but because the owner of the asset gets to decide the conditions of its sale. (The fairness of the front door is debatable too, by the way.) The side door is wire fraud, not because it is “unfair”—Singer says here that it’s one-tenth the price of the back door, which kind of seems fairer—but because consultants and coaches are misappropriating the asset and selling it for their own benefit. The law doesn’t protect fairness; it protects property.
Through these spoof orders, the traders intentionally sent false signals of supply or demand designed to deceive market participants into executing against other orders they wanted filled. According to the order, in many instances, JPM traders acted with the intent to manipulate market prices and ultimately did cause artificial prices.
Theft, by definition is when someone deprives the right of property from another person. Market participants should have been buying and selling at prices determined by the market. JPM manipulated that and created a profit as a result, thereby deprived other people from their profit.
So yes this is absolutely theft, just not the physical theft you're used to seeing when a robber walks into a bank and steals cash.
> "...The law doesn’t protect fairness; it protects property."
ah, the crux of the problem. we've veered much too far in this direction, and that's why we get absurdities like corporations stealing millions being punished much less severely than individuals stealing thousands. the law should primarily be about protecting people, not property (or corporations).
This is actually not the case in quite a few countries nowadays. It Italy there is now a crime of "murder by driving" that gets automatically charged if there are victims in a car accident.
Maybe it's time to make financial-crime penalties a bit harsher.
Keep in mind that these categories are fuzzy. I Germany, a car driver was recently criminally convicted with murder after killing a pedestrian with his car.
The argument was that the way he was driving, we was accepting death. Like somebody shooting with a gun into a crowd.
A year or three ago a guy driving a pickup truck killed a pedestrian in Vernon parish, LA, made a Facebook post akin to "hope this buffs out [of my truck]" and other negative things, and wasn't charged with anything because killing pedestrians isn't illegal in Louisiana, technically. I forget if he had political ties, but I don't think he did.
There was a lesson in the new employee training on sexual harassment (for sales people, but still a general lesson) - don't bring a client to a strip club.
A higher up sales manager had actually done this in the london office and it was posted on memegen, and mentioned that this was literally in the employee manual. Lesson: be a manager.
Lesson: be a bank. The more corrupt, the better (HSBC). Until another Hitler comes along and does something about it.
The fine was levied against the entire company, not just their trading subsidiary.
>settling charges against JPMorgan Chase & Company (JPMC & Co.) and its subsidiaries, JPMorgan Chase Bank, N.A., and J.P. Morgan Securities LLC (JPMS) (collectively, JPM)
Why should you? Suppose you did a bad. Let's it was a side hustle where you took refurbished ipads and resold them as brand-new ipads. Over the past year you made $2000 in profit from doing so. The cops caught you doing it and fined you $10k. That sounds like a pretty serious penalty. However, you're also a bay area software engineer making $400k total comp, so $10k is a drop in the bucket. Should they fine you $200k instead, just because you happen to be a software engineer?
Because if these are trading actions that lead to these fines then a rational actor might decide against taking then in the future lest trading become a net negative.
Yes but they have nearly 200k employees and most of banking compensation is in the bonus, which draws from this net income. This leaves $63k excess which is obviously not distributed equally but, considering the fairly low base salaries compared to strong SWE roles, probably map to similar compensation.
It's hard to not feel shocked when seeing numbers in the billions but you can't forget they are often accompanied by an equally shocking denominator.
"... including the highest restitution ($311,737,008), disgorgement ($172,034,790), and civil monetary penalty ($436,431,811) amounts in any spoofing case."
Unless you are implying that JPM profited more than $172 million, the report suggests the government took the profits.
Is that penalty going to hit the people who were steering the ship at the time, who got big bonuses? Or is it only going to impact the bonuses of the people who are steering the ship today?
That's exactly what they did. The article says $172m disgorgement (how much the CFTC thinks they profited from this), $311m restitution (the amount the CFTC thinks JPM harmed others but didn't capture), and $436m civil penalty ("naughty boy" fine).
I read that also, but it wasn't clear to me that the disgorgement was the profit, I assumed it was just what they had on hand from their takings, like if you rob a bank and get caught with $5k left then they would disgorge you of the $5k and then deal with the rest later.
I feel like both you and parent are ignoring operational + reputation costs of being naughty boys. If we are saying the bad behavior should not be profitable the fine should be above (ill gotten gains - operational costs it took to acquire them + whatever interest those ill gotten gains received before the culprit got caught).
Reputational losses are also a thing, agencies and whistleblowers will be paying a lot more attention to this sort of thing from JPMorgan from now on. Maybe a lesser effect would be morally conscious people (in finance haha) choosing not to work there.
Of course it is also possible that Chase PR machine greases the right hands to negate all of the downsides, and then you have a point that current political/regulatory climate is allowing this is be a profitable business model.
I'm being dismissive but I doubt JP Morgan Chase is going to suffer any real backlash other than the direct financial punishment they are receiving here. There's also a good chance that they will file suit over it as it's worth spending a few million in lawyer fees to try to reduce or save the $920m entirely, so it's not even over yet.
If you are caught one time out of 10, this is still profitable and those people, being professional risk manager, will take the chance. Not to mention they can then invest the benefits in a difference venue, and make money from that, which will not be part of the fine.
Jail time however, is not something everyone will want to gamble on.
Its a little more subtle than that, you see how many people are employed directly and indirectly by the banks and what if that bank should headquarters abroad, how else will the Fed's get their "anonymous" tip offs?
Better ways is to launder your ill gotten gains through property, let a few more respectable people take a slice of the cake like lawyers, property surveyors, etc etc and then it all becomes good until you become a political pawn.
Edit.
I should add, even when "entrapped" by the FBI with a few $million of coke and its recorded on hidden camera's you can still get off if you have been useful to the country or a few country's, in this case playing a part in reducing the troubles in Northern Island.
US prosecutors literally said that they cannot criminally charge JPM (in another case) because that would destabilize the US financial system. They are literally "too big to jail".
Can you cite a source of a US DOJ head saying the actual quote you claim they said .
I work in the industry and follow things like this and I haven't heard the US government saying they would like to charge JPM but they can't due to destabilizing the US financial system.
I'll even let you go back 5 years to find such a quote!! I don't think i've heard of this happening.
> That sentiment was echoed as late as 2012 by Lanny Breuer, then the head of the Justice Department’s criminal division, who said in a speech at the New York City Bar Association that he felt it was his duty to consider the health of the company, the industry, and the markets in deciding whether or not to file charges.
> I can see why you chose to create a throw away account in this case to comment. I now see i'm being trolled by an anonymous account :( I'm sorry I feel for it.
Please don't include stuff like this in your comments. It degrades HN, and does not "assume good faith", as the HN guidelines ask you to do (https://news.ycombinator.com/newsguidelines.html). The commenter could be uninformed, or have genuinely thought that their quote backed up their position (and just been wrong).
Saying that you're "being trolled by an anonymous account" is bad form and definitely not the kind of stuff that I want to see on HN.
It seems odd that you initially 'graciously' let the OP "go back 5 years" to back up their claim, and then immediately retorted "that was 10 years ago. You're trolling me", like you were entirely aware of what they might be talking about.
The Holder doctrine, (as explained in the article that was provided as a source) dates from 1999 and is thus over two decades old. This doctrine was referenced in 2012 by the head of the Justice Department’s criminal division.
If you believe this doctrine is no longer followed, it would behoove you to provide evidence of your own that "too big to jail" hasn't been a guiding doctrine for over two decades.
> I can see why you chose to create a throw away account in this case to comment. I now see i'm being trolled by an anonymous account :( I'm sorry I feel for it.
Calling someone a troll never improves any discussion and is inappropriate on HN.
They are not irreplaceable but it would create the sort of inverse "moral hazard" that might stop these practices, which are apparently what's being protected.
The revolving door between the financial sector and our government- if they jailed people now then when it's their turn to get rich off of their government connections they might risk jail.
It’s bad for campaign donations and bad for future highly paid job prospects in the financial industry. So politicians and agency workers have strong incentives to not be too tough on banks.
I feel like in those cases, especially with corporations, you can do stuff like partial nationalization or confiscation of the bank then. "Your criminally irresponsible, so we will take over part of it as the more responsible party". It's the corporate equivalent of a criminal punishment, maybe the community service equivalent.
> Holder’s memo asserted that “collateral consequences” from prosecutions—including corporate instability or collapse—should be taken into account when deciding whether to prosecute a big financial institution.
> That sentiment was echoed as late as 2012 by Lanny Breuer, then the head of the Justice Department’s criminal division, who said in a speech at the New York City Bar Association that he felt it was his duty to consider the health of the company, the industry, and the markets in deciding whether or not to file charges.
Instead of worrying about the banks he should have been worried about the moral fabric of the country. At least since the bailouts 2008 there is a (mostly justified) perception that the system is rigged in favor of the wealthy. This has made a lot of people very cynical and has allowed a ton of conspiracy theories to rise. If this trend continues there will be a point when people will vote in a dictator.
It’s already a big problem that politics attracts more and more crazy people and reasonable people are staying away.
By following the setup guide I was able to achieve 30-60ms latency. It's still a lot of fun. I spent a lot of time playing with others during the pandemic. A few tips for better experience:
- Mute participants that have high delay.
- Avoid rooms with more than ~10 participants.
- Mute yourself if you are not playing.
- Adjust your volume properly. If you are too loud, others may hear clicks and may perceive it as audio drops.
If you do that you're stuck with round trip times all the way down the dependency tree. HTTP/2 reduces the overhead of that, but doesn't eliminate it, so now you've added a bunch of loading time to your site.
I don't see a counterargument here. "It's fast" doesn't change the fact that using 'native' imports instead of bundles means you're still adding the round trip time for the browser to request each set of dependencies all the way down the dependency tree.
The most obvious that comes to mind is eval. However a custom function could also be dangerous, e.g. a function that posts some sensetive information to a REST API where the attacker can control the variable that defines the API endpoint address and thus can send the information to themselves.
How come that the same company that ruined countless people's mental health announces that they want to completely immerse mankind in an alternative reality and take over human senses in a much more potent way, yet the most discussed aspect of it seems to be whether it's possible, and what problems need to be solved in order to make it happen.
Let's about devastating mental health problems that this will cause. To me it's obvious that they will majorly fuck up human perception of reality like they did with social interactions.
Oh, and what do you think which age groups will be mostly drawn to it?
Also Halt And Catch Fire was decent: https://www.imdb.com/title/tt2543312