A federal jury within the Northern District of Illinois convicted two former treasured metals merchants at JPMorgan Chase & Co. (JPMorgan) right this moment of fraud, tried worth manipulation, and spoofing in a multi-year market manipulation scheme of treasured metals futures contracts that spanned over eight years and concerned 1000’s of illegal buying and selling sequences.
The proof at trial confirmed that between roughly Could 2008 and August 2016, the defendants, together with different merchants on the JPMorgan treasured metals desk, engaged in a widespread spoofing, market manipulation, and fraud scheme. The defendants positioned orders that they meant to cancel earlier than execution with a view to drive costs on orders they meant to execute on the other facet of the market. The defendants engaged in 1000’s of misleading buying and selling sequences for gold, silver, platinum, and palladium futures contracts traded by way of the New York Mercantile Trade Inc. (NYMEX) and Commodity Trade Inc. (COMEX), that are commodities exchanges operated by CME Group Inc. These misleading orders have been meant to inject false and deceptive details about the real provide and demand for treasured metals futures contracts into the markets.
“At present’s jury verdict demonstrates that those that search to control our public monetary markets will likely be held accountable and delivered to justice,” stated Assistant Lawyer Normal Kenneth A. Well mannered, Jr. of the Justice Division’s Legal Division. “With this verdict, the Division has secured convictions of ten former merchants at Wall Road monetary establishments, together with JPMorgan, Financial institution of America/Merrill Lynch, Deutsche Financial institution, The Financial institution of Nova Scotia, and Morgan Stanley. These convictions underscore the Division’s dedication to prosecuting those that undermine the investing public’s belief within the integrity of our commodities markets.”
“For years the defendants allegedly positioned 1000’s of false orders for treasured metals, making a ruse that lured others into making disadvantageous trades” stated Assistant Director Luis Quesada of the FBI’s Legal Investigative Division. “At present’s conviction demonstrates that irrespective of how complicated or long-running a scheme is, the FBI is dedicated to bringing these concerned in crimes like this to justice.”
Following a three-week trial, Smith was convicted of 1 rely of tried worth manipulation, one rely of spoofing, one rely of commodities fraud, and eight counts of wire fraud affecting a monetary establishment. Nowak was convicted of 1 rely of tried worth manipulation, one rely of spoofing, one rely of commodities fraud, and 10 counts of wire fraud affecting a monetary establishment. Sentencing dates haven’t but been set.
Two different former JPMorgan treasured metals merchants, John Edmonds and Christian Trunz, have been beforehand convicted in associated instances. In October 2018, Edmonds pleaded responsible within the District of Connecticut to at least one rely of commodities fraud and one rely of conspiracy to commit wire fraud, commodities fraud, worth manipulation, and spoofing. In August 2019, Trunz pleaded responsible within the Jap District of New York to at least one rely of conspiracy to interact in spoofing and one rely of spoofing. Edmonds and Trunz are awaiting sentencing.
In September 2020, JPMorgan admitted to committing wire fraud in reference to: (1) illegal buying and selling within the markets for treasured metals futures contracts; and (2) illegal buying and selling within the markets for U.S. Treasury futures contracts and within the secondary (money) marketplace for U.S. Treasury notes and bonds. JPMorgan entered right into a three-year deferred prosecution settlement by way of which it paid greater than $920 million in a legal financial penalty, legal disgorgement, and sufferer compensation, with parallel resolutions by the Commodity Futures Buying and selling Fee and the Securities Trade Fee introduced on the identical day.
The FBI’s New York Subject Workplace investigated the case. The Commodity Futures Buying and selling Fee’s Division of Enforcement offered help on this matter.
Market Integrity & Main Frauds Unit Chief Avi Perry and Trial Attorneys Matthew Sullivan, Lucy Jennings, and Christopher Fenton of the Legal Division’s Fraud Part are prosecuting the case.