JPMorgan – AKA Bank A – Traders Charged with Market Manipulation

The Department of Justice just made JPMorgan’s public relations team buy a lot of headache medication.

Two JPMorgan precious metals traders and one former trader face charges for their alleged participation in a racketeering conspiracy.

They also face charges of other federal crimes in connection with the manipulation of the precious metals futures markets.

The alleged crimes spanned over eight years. The Department of Justice said in an indictment that the scheme showed thousands of illegal trades.

Department of Justice Charges Three

The Department of Justice named three individuals in the indictment. They are:

• First, Gregg Smith of Scarsdale, New York. Smith was an executive director and trader on JPMorgan’s precious metals desk in New York.  He joined JPMorgan in May 2008.
• Second, Michael Nowak of Montclair, New Jersey.  Nowak was a managing director and ran JPMorgan’s global precious metals desk.  He joined JPM n July 1996.
• Third, Christopher Jordan of Mountainside, New Jersey. Jordan joined JPM in March 2006. He was an executive director and trader on the firm’s precious metals desk in New York. Jordan left the company in December 2009.

The indictment and associated press release further detail a complex scheme that affected supply and demand in the precious metals market.

“Smith, Nowak, Jordan, and their co-conspirators allegedly engaged in a complex scheme to trade precious metals in a way that negatively affected the natural balance of supply-and-demand,” said FBI Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office. “Not only did their alleged behavior affect the markets for precious metals, but also correlated markets and the clients of the bank they represented. For as long as we continue to see this type of illegal activity in the marketplace, we’ll remain dedicated to investigating and bringing to justice those who perpetrate these crimes.”

Detailing the Charges

The Department of Justice has charged the three with one count of conspiracy to conduct the affairs of an enterprise involved in interstate or foreign commerce through a RICO activity. They also face one count of conspiracy to commit wire fraud affecting a financial institution, bank fraud, commodities fraud, price manipulation, and spoofing. The face one count of bank fraud and one count of wire fraud affecting a financial institution.

In addition, Smith and Nowak face charges of attempted price manipulation. They also face one count of commodities fraud and one count of spoofing.

“The defendants and others allegedly engaged in a massive, multiyear scheme to manipulate the market for precious metals futures contracts and defraud market participants,” said Assistant Attorney General Brian A. Benczkowski.  “These charges should leave no doubt that the Department is committed to prosecuting those who undermine the investing public’s trust in the integrity of our commodities markets.”