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JP Morgan's precious metal dealers have earned millions of dollars from fraudulent transactions, setting up a sprawling criminal plot to manipulate prices, according to the US Department of Justice, which appears to signal a crackdown.
Gregg Smith, Michael Nowak and Christopher Jordan, current and former JP Morgan traders, have engaged ina broad multi-year plan to manipulate the precious metals futures market and market participants' fraudDeputy Attorney General Brian Benczkowski said in a statement issued Monday by the Department of Justice. The DOJ claimed that bankers had earned millions of dollars by scamming other market players, including some of their own customers, into thousands of illicit transaction sequences.
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The trio would have engaged inidentity theft"On a large scale – placing transactions that they intended to cancel before execution in order to manipulate the price of gold, silver and other precious metals – dating back to more than 10 years ago, openly discussing their illegal behavior in prosecution and prosecution press logs and charged with bank fraud, wire and merchandise, price manipulation and the theft of identity, and ofconspiracy to manage the business of a company involved in trading between states or abroad through racket activities"- a charge usually reserved for members of an organized crime group.
These charges should leave no doubt that the Department is committed to prosecuting those who undermine investor confidence in the integrity of our commodity markets.
It is clear that the charges are supposed to send a message – although this message is aimed at Wall Street criminals or Americans tired of seeing bankers run away with financial crimes, he is uncertain. The Justice Department has lost the last two price manipulation cases in court.
Smith and Nowak were put on leave by JP Morgan last month, as the investigation drew to a close, as Jordan had already left to trade precious metals at Credit Suisse and First New York. According to the indictment, all three arrived at the bank after buying out the bankrupt Bear Stearns, where their illegal transactions were even more egregious.
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Their indictments were secured with the help of at least two former bank traders who had pleaded guilty to what became a vast multi-bank price-rigging survey in the precious metals sector, which had until here captivated 16 people, according to Bloomberg.
Last year, Deutsche Bank, HSBC and UBS reached an agreement with the Commodity Futures Trading Commission to settle claims that their traders used identity theft to manipulate futures prices precious metals – pouring respectively $ 30 million, $ 1.6 million and $ 15 million – in order to avoid admitting wrongdoing and the possibility of a prolonged court battle.
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