Editor’s Note: With so much market volatility, keep up with the daily news! In just a few minutes, get caught up in our quick recap of today’s top news and expert insights. Sign up here!
(Kitco News) – The jury was told that JP Morgan has been ripping off the gold and silver markets for years.
Lucy Jennings, a prosecutor with the Justice Department’s fraud division, said, “This case involves a criminal conspiracy within one of Wall Street’s largest banks,” adding, “In order to make more money for themselves, they decided to cheat.”
Three former JPM employees are in the line of fire, including veteran precious metals executive Michael Nowak, gold trader Gregg Smith and Jeffrey Ruffo, a hedge fund sales executive. They are all accused of criminal conspiracy, as well as price manipulation, wire fraud, commodity fraud and spoofing from 2008 to 2016.
Spoofing was outlawed by law in 2010. They are huge orders that traders cancel before they can be filled in order to push prices in the direction they want their actual trades to be profitable.
Smith, a leading gold trader, is said to have performed 38,000 stratification sequences over the years, or about 20 a day, prosecutors said in filing. Nowak himself primarily traded options, but he would delve into the futures market to hedge those positions. According to records, he attempted stratification in September 2009 and performed the technique about 3,600 times. Ruffo reportedly told Smith where he needed the market to fill orders involving at least two of his hedge fund clients. Moore Capital Management and Tudor Investment Corporation, according to court filings.
This isn’t the only high-profile case of late. Two former precious metals traders at BofA’s Merrill Lynch were found guilty of spoofing by a jury in Chicago last year. In 2020, two Deutsche Bank AG traders were convicted. In September 2019, JPMorgan admitted wrongdoing and agreed to pay more than $920 million to settle US lawsuits alleging market manipulation in both precious metals and government bonds.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of the author Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article assume no responsibility for any loss and/or damage resulting from the use of this publication.