Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS) are now free of a legal dispute they had been fighting for years. On Thursday, a federal judge dismissed a lawsuit brought by individual securities traders and trading firms that had accused them and their employees of “spoofing” — placing orders for trades in order to manipulate the price, then cancelling those orders at the last moment.
The dismissal was due to the expiration of a two-year statute of limitations, following the December 2016 filing of an initial lawsuit involving many of the principals involved in the Bank of America and Morgan Stanley dispute.
While this lawsuit is now history, the two individuals accused of the malfeasance — Edward Bases and John Pacillo — are still on the hook legally. In January 2018, the two precious metals traders were charged with commodities fraud, along with six other people. Bases and Pacillo’s trial will take place in a federal court in Chicago starting on July 12. The pair have both pleaded not guilty.
Pacillo had worked for both Bank of America and Morgan Stanley; Bases only worked for the former company.
Neither Bank of America nor Morgan Stanley has yet commented officially on the lawsuit’s dismissal. Both companies have clearly been eager to put it behind them. Following a Department of Justice investigation into Bank of America’s alleged spoofing, the company paid $25 million and signed a non-prosecution agreement to settle the matter. It also shelled out $11.5 million for a civil monetary penalty imposed by the Commodity Futures Trading Commission (CFTC).
Morgan Stanley, meanwhile, agreed to a $1.5 million settlement in a civil action with the CFTC shortly thereafter.
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