Pending Criminal Division Cases

Merrill Lynch Commodities Inc. (MLCI) Non-Prosecution Agreement

On June 25, 2019, Merrill Lynch Commodities Inc. (MLCI), a global commodities trading business, entered into a Non-Prosecution Agreement (“NPA”) and agreed to pay a combined $25 million in criminal fines, restitution, and forfeiture of trading profits.  The NPA arises from the government’s investigation into a multi-year scheme by MLCI precious metals traders to mislead the market for precious metals futures contracts traded on the Commodity Exchange Inc. (COMEX).

According to MLCI’s admissions, beginning by at least 2008 and continuing through 2014, precious metals traders employed by MLCI schemed to deceive other market participants by injecting materially false and misleading information into the precious metals futures market.  They did so by placing orders for precious metals futures contracts that, at the time the traders placed the orders, they intended to cancel before execution.  In doing so, the traders intended to create the false impression of increased supply or demand and, in turn, to induce other market participants to buy and to sell futures contracts at quantities, prices, and times that they otherwise likely would not have.  Over the relevant period, the traders placed thousands of fraudulent orders.

Under the terms of the NPA, MLCI and its parent company, Bank of America Corporation (BAC), have agreed to cooperate with the government’s ongoing investigation of individuals and to report to the Department evidence or allegations of violations of the wire fraud statute, securities and commodities fraud statute, and anti-spoofing provision of the Commodity Exchange Act in BAC’s Global Markets’ Commodities Business, whose function is to conduct wholesale, principal trading and sales of commodities.  MLCI and BAC also agreed to enhance their existing compliance program and internal controls, where necessary and appropriate, to ensure they are designed to detect and deter, among other things, spoofing and other manipulative conduct in BAC’s Global Markets Commodities Business.

The Department reached this resolution based on a number of factors, including MLCI’s ongoing cooperation with the United States and MLCI and BAC’s remedial efforts, including conducting training concerning appropriate market conduct and investment and implementing improved transaction monitoring and communication surveillance systems and processes. 

As part of the investigation, the Department obtained an indictment against Edward Bases and John Pacilio, two former MLCI precious metals traders, in July 2018.  Those charges remain pending in the U.S. District Court for the Northern District of Illinois.  See United States v. Edward Bases and John Pacilio, 18-cr-48 (N.D. Ill.).  All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

For more information about the MLCI Non-Prosecution Agreement (“NPA”), please see below:

MLCI Non-Prosecution Agreement (NPA)
Press Release

 

Victim Impact Statement: If you would like to submit a Victim Impact Statement, you may do so by mailing the Victim Impact Statement to: Victim Witness Unit, U.S. Department of Justice, Criminal Division, Fraud Section, 10th & Constitution Avenue, NW, Bond Building, Room 4416, Washington, DC 20530. You also may submit the Victim Impact Statement via email at VictimAssistance.fraud@usdoj.gov or by fax at: (202) 514-3708.

Victim Impact Statement (PDF)

The information on this website will be updated as new developments arise in the case. If you have any questions, please call the Victim Assistance Line toll-free at (888) 549-3945 or email us at VictimAssistance.fraud@usdoj.gov.


Crime Victims’ Rights Act and Right to Retain Counsel: The Crime Victims’ Rights Act (18 U.S.C. § 3771) applies only to victims of the counts charged in federal court, and thus individuals may not be able to exercise all of these rights if the crime of which the individual is a victim was not charged. Section 377I(c)(2) of this Act requires that we advise you that you have the right to retain counsel. Although the statute specifically sets forth your right to seek advice of an attorney with regard to your rights under the statute, there is no requirement that you retain counsel. The Government may not recommend any specific counsel, nor can the government (or the court) pay for counsel to represent you. Government attorneys represent the United States.

If you elect to obtain counsel to represent your interests, please have your attorney notify this office in writing at: U.S. Department of Justice, Criminal Division, Fraud Section, 10th & Constitution Avenue, NW, Bond Building, 4th Floor, Washington, DC 20530, Attention: Victim Witness Unit; fax: (202) 514-3708; or email: VictimAssistance.fraud@usdoj.gov. If you elect not to retain counsel to represent your interests, you do not need to do anything.

 

Updated June 25, 2019

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