After an extensive investigation that spanned eight years, the US Department of Justice has now formally charged three JPMorgan traders for their involvement in market manipulation.
The employees, which trade mostly in gold and other precious metals, allegedly participated in widespread "spoofing" and fraudulent activities in an attempt to manipulate market movements.
The government agency formally charged JPMorgan executive director Gregg Smith, managing director and head of the firm's global precious metals desk Michael Nowak, and former JPMorgan employee Christopher Jordan. Both Smith and Nowak remain to be employees by the company as of Monday morning.
JPMorgan did not immediately issue a response to the charges brought onto their employees. The company did, however, state that it was responding and cooperating with investigators regarding the matter.
According to the US Department of Justice, the three JPMorgan employees had been involved in market manipulation practices between 2008 and 2016.
The traders allegedly employed different tactics to manipulate the prices of silver, gold, platinum, and palladium traded on the CME Commodity Exchange and the New York Mercantile Exchange.
FBI New York Field Office Assistant Director William F. Sweeney Jr. explained that the Smith, Jordan, and Nowak deployed complex schemes to fool traders, negatively impacting the balance of supply and demand in the exchanges.
The DOJ further elaborated that one of the techniques used by the three traders was placing massive trade orders with the intention of canceling them before execution. The orders apparently tricked some traders into either buying or selling futures contracts, which they otherwise wouldn't have done were it not for the massive orders.
Lawyers representing Nowak in the case mentioned in a statement that they were very much disappointed in the DOJ's persecution of their client, which they claim has done nothing wrong. The lawyers further mentioned that they were looking forward to the trial as they have enough to prove their client's innocence in the matter and they are confident that he will be fully exonerated.
The charges were the latest to have been filed by the Justice Department in its crackdown on the spread of commodities fraud in US markets.
The agency revealed that it had already bagged eight guilty pleas and one trader has been sentenced to three years in prison. The DOJ stated that it still has around half a dozen pending cases.
Apart from the DOJ, the US Commodity Futures Trading Commission has reportedly filed a civil enforcement action against Smith and Nowak this week. Meanwhile, other agencies are waiting on the results of the trial prior to taking further action.
Assistant Attorney General Brian A. Benczkowski mentioned this week that his office will closely be following the facts of the case to see if other institutions can be implicated.
