- Bank of America Securities paid $5.56 million to resolve a DOJ spoofing probe, avoiding prosecution due to self-disclosure and cooperation.
- Regulators are intensifying spoofing enforcement globally; firms are incentivized to self-report under revised DOJ policy, reducing penalties significantly.
NEW YORK — Bank of America Securities has agreed to pay $5.56 million to resolve a U.S. Department of Justice investigation into market manipulation by two former traders, who were accused of placing thousands of fake “spoof” orders to distort U.S. Treasuries prices over nearly six years.
The settlement, announced last month, includes $1.96 million in disgorgement of ill-gotten gains and $3.6 million for a victim compensation fund, with no admission of liability from the firm and no prosecution thanks to its self-reporting and cooperation.
The DOJ’s probe centered on actions from November 2014 to April 2020, when the traders schemed to manipulate both the cash and futures markets for U.S. Treasuries.
One trader, Tyler Forbes, had already pleaded guilty in April 2022 to securities manipulation charges and was sentenced to time served plus two years of supervised release.
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He faced up to 20 years but avoided further prison time. The duo collectively entered more than 1,000 suspected spoof orders—non-bona fide trades placed to create a false impression of supply or demand, then quickly canceled to profit on legitimate orders.
“Spoofing undermines the transparency and integrity of the markets by distorting the true nature of supply and demand,” said Bill St. Louis, executive vice president and head of enforcement at the Financial Industry Regulatory Authority (FINRA), in a 2023 statement tied to a related case.
The DOJ credited Bank of America Securities for its “timely and voluntary self-disclosure,” full cooperation, and remediation efforts, including comprehensive trading reviews and enhanced compliance controls on its U.S. Treasuries desk.
A Bank of America spokesperson declined to comment beyond the DOJ’s announcement.
Retail investors have deemed this report as another ‘pay to play’ case.
This incident follows a $24 million FINRA fine in 2023 for supervisory lapses in the same scheme, where the regulator highlighted failures to detect the spoofing.
“Spoofing is especially detrimental in the U.S. Treasury securities market, given its status as a benchmark for countless financial instruments and transactions,” St. Louis added then.
The case highlights ongoing regulatory scrutiny of spoofing in Treasuries trading, a practice that can ripple through global markets by artificially influencing benchmark rates used for mortgages, corporate bonds, and more.
With the DOJ revising its Corporate Enforcement Policy in May 2025 to reward self-disclosure more generously, firms like Bank of America are incentivized to come clean early—potentially saving millions in fines and avoiding indictments.
A Pattern of Wall Street Scrutiny: Recent Spoofing Cases and Their Fallout
Bank of America’s settlement is the latest in a string of high-profile spoofing crackdowns that have cost Wall Street billions and reshaped trading practices.
In July 2025, JPMorgan Chase agreed to pay $920 million to resolve criminal and civil probes into spoofing and manipulation in precious metals and Treasuries markets from 2008 to 2020, involving over 157 million deceptive orders.
The bank avoided prosecution but admitted facts, with CEO Jamie Dimon calling it a “legacy issue” from a pre-compliance overhaul era.
Earlier, in 2024, Citadel Securities settled with the CFTC for $7 million over spoofing in equity index futures, while Jane Street Group paid $25 million in 2023 for similar violations in commodity markets.
The SEC’s 2022 case against JPMorgan resulted in a $200 million fine for manipulating the silver market, where traders placed and canceled thousands of orders to sway prices.
“These cases demonstrate our commitment to rooting out manipulative trading that harms market integrity,” said SEC Enforcement Director Gurbir Grewal at the time.
Globally, the trend continues. In September 2025, the UK’s Financial Conduct Authority fined Optiver $1.5 million for spoofing in the FTSE 100 index, part of a broader EU crackdown that saw Deutsche Bank pay €3.75 million in 2024 for historical Treasury manipulation.
These penalties, often in the tens of millions, reflect regulators’ zero-tolerance stance, with the CFTC reporting over $3 billion in spoofing fines since 2015.
For retail investors, the implications are real: Spoofing distorts prices, potentially inflating costs for Treasury-backed products like mortgages or bonds.
“Even small manipulations can cascade through the economy,” noted a 2025 Stanford study on market misconduct’s volatility effects.
As firms like Bank of America beef up surveillance—implementing cross-product monitoring since 2022—the hope is for cleaner markets, but the cases keep coming.
Lessons for Compliance: Self-Disclosure as a Shield
The DOJ’s decision not to prosecute Bank of America Securities underscores the value of voluntary disclosure under its May 2025 policy revisions, which promise “the most generous benefits” for cooperating firms.
“Timely self-disclosure and full cooperation” were key, per the announcement, echoing a shift toward rewarding ethics over punishment.
KPMG’s 2025 regulatory analysis warns that without cultural changes, even robust frameworks falter—yet cases like this show self-reporting can slash penalties dramatically.
AInvest’s September 21, 2025, take called it a “case study in regulatory trust erosion,” noting Bank of America’s stock rose 1.4% post-settlement, bucking the typical dip.
“Repeated scandals erode trust as 2025 Stanford study links misconduct to market volatility,” the analysis added, urging a “proportionality” in fines amid ESG scrutiny.
OneSafe’s September 19 blog framed it as a lesson for crypto banking: “Self-disclosure and compliance can potentially mitigate penalties,” highlighting the $5.56 million as a “significant” but manageable hit for a firm with $28.7 billion in 2024 profits.
Investing.com echoed this on September 18, reporting the settlement as a “decline to prosecute” thanks to remediation.
American Banker’s September 19 piece detailed trader Joshua Lebental’s 523 spoof orders—447 canceled without execution—and praised BofA’s fixes like anti-manipulation training, stating, “The case also serves as a reminder to banks: Report white-collar crimes to the DOJ quickly and thoroughly to avoid prosecution.”
Compliance Week’s September 18 coverage tied it to Uber’s ADA suit, noting the DOJ’s focus on self-reporting incentives.
As spoofing cases proliferate—$3 billion in CFTC fines since 2015—the message is clear: Come clean or pay up.
For investors, these settlements are a reminder of systemic risks, and the unfair system that allows Wall Street giants to continue abusing the markets with merely slaps on the wrist.
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