JPMorgan put at least four members of the Treasuries operation on leave starting earlier this year. The departures were related to the investigation, according to a person familiar with the matter. The settlement didn’t identify the five Treasuries traders, and it’s unclear whether the government will pursue any legal action against any of the traders referenced in the settlement.

In a couple of the trades, prosecutors alleged in the indictment against the individuals that a JPMorgan trader was spoofing the market for gold and silver futures as he made trades for two hedge funds. The government referred to the funds as “key clients” that provided “important sources of revenue and market intelligence” for the precious metals desk. It didn’t name the funds, accuse them of any wrongdoing or indicate they were aware of any allegedly improper trading, which occurred in December 2011 and January 2012.

According to people familiar with the matter, those funds were Moore Capital Management and Tudor Investment Corp. They declined to comment through spokesmen.

The JPMorgan penalty far exceeds previous spoofing-related fines levied against banks, and is the toughest sanction imposed in the Justice Department’s years-long crackdown on spoofing.

Spoofing typically involves flooding derivatives markets with orders that traders don’t intend to execute to trick others into moving prices in a desired direction. The practice has become a focus for prosecutors and regulators in recent years after lawmakers specifically prohibited it in 2010. While submitting and canceling orders isn’t illegal, it is unlawful as part of a strategy intended to dupe other traders.

More than two dozen individuals and firms have been sanctioned by the Justice Department or the CFTC, including day traders operating out of their bedrooms, sophisticated high-frequency trading shops and big banks such as Bank of America Corp. and Deutsche Bank AG.

--With assistance from Ben Bain, Michelle F. Davis, Katherine Burton and Jack Farchy.

This article was provided by Bloomberg News.

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