Ex-Scotia Capital, a Bear Stears metal trader guilty in an identity theft case

A former Scotia Capital trader and Bear Stearns pleaded guilty Thursday to a federal crime and admitted to manipulating the precious metals markets for nine years – the latest in a series of repressive measures on commodity markets by the Ministry of Justice.

Shopkeeper Corey Flaum, 41, of Mount Kisco, NY, cooperates with ongoing federal criminal investigation, charges charges of attempted commodity price manipulation in District Court American Brooklyn.

Flaum during his guilty plea admitted that, around June 2007 and July 2016 approximately, he "had spent thousands of orders to manipulate the prices of the gold futures, the money, the platinum and palladium ", according to the Department of Justice.

Flaum worked at Scotia Capital from 2010 to 2016, and the late investment bank Bear Stearns from 2006 to 2008, using the FINRA BrokerCheck system. He should be sentenced on October 29th.

Scotia Capital declined to comment when CNBC made contact. Flaum did not immediately respond to a request for comment.

Flaum was one of two former precious metal dealers who agreed Thursday to settle separately the regulatory charges filed by the Commodities Futures Trading Commission for a prohibited market manipulation strategy known as spoofing.

This strategy involves placing orders with the intention of canceling them before they can be executed. The purpose of identity theft is to affect the price of the commodity and thus benefit a pre-existing bargaining position.

CFTC order says Flaum "and others at the bank [where he had worked] engaged in manipulative and deceptive conduct by engaging in the practice of "identity theft". "

John Edmonds, a former employee of J.P. Morgan, pleaded guilty in a federal Connecticut court in October for offenses related to the manipulation of the metals markets.

Edmonds, who has not yet been sentenced in his criminal case, and several other traders who also pleaded guilty to crimes related to the parody of conversation, also cooperate with federal prosecutors in ongoing investigations with big banks.

In the last five years, federal prosecutors have initiated 11 prosecutions for 15 accused.

The CFTC said Flaum and Edmonds had learned to be imitated by more experienced traders from their respective banks.

In the case of Edmonds, it was while he was at J.P. Morgan, according to the CFTC 's indictment.

In the case of Flaum, he learned to spoof by watching a more experienced trader at Bear Stearns, and then witnessed similar behavior to Scotia Capital, according to a document filed by the CFTC.

The agency did not explicitly name J.P. Morgan, Bear Stearns and Scotia Capital in the documents. But these depots describe the conduct of Edmonds and Flaum for years, they worked in these institutions.

The CFTC still has not decided on civil penalties against the two men.

James McDonald, director of the CFTC's application, said in a statement that "the enforcement actions taken today make it clear that the identity theft and the manipulation on our markets will not be tolerated and that the CFTC will use all the tools in its arsenal to prosecute individuals and entities who engage in this misconduct. "

McDonald added: "These cases also show that, when an individual has demonstrated his willingness to cooperate and cooperated, the CFTC may choose to defer the badessment of the cooperator's penalties until the cooperation is almost complete. "

Two civil suits alleging market manipulation by JP Morgan are pending in a federal court in New York after prosecutors warned that these cases could interfere with their ongoing criminal investigation.