The Justice Department’s multi-year investigation has resulted in the convictions of two key leaders from the Precious Metals Trading Desk at JP Morgan Chase in a long running manipulation scheme.
A jury convicted the two defendants, Michael Nowak and Gregg Smith, of wire fraud, attempted price manipulation, commodities fraud, and price spoofing involving a scheme that spanned more than ten years and involved.
The crimes occurred from at least 2008 until at least 2016. The convicted precious metals traders face more than 20 years in prison.
Several other traders involved in the scheme had previously pleaded guilty.
The guilty pleas and these most recent convictions provide proof of the long-held belief that major Wall Street banks have been systematically manipulating futures prices for profit.
JP Morgan Chase is a major trustee and depository for significant exchanges such as COMEX.
Evidence was presented during that trial that Smith placed an average of 20 spoofed orders a day over a 3-year period, which accounted for 38,000 trades.
While some trades occurred before 2010’s law changes, the executives, directors, managers, and traders from the precious metals desk at JP Morgan Chase directed employees to engage in illegal trading and price manipulation.
It’s difficult to determine the full extent of the scale of fraud based on the publicly available evidence. However, it is reasonable to speculate that the overall value of price manipulation fraud costs investors billions of dollars.
Details provided by the DOJ show that the convicted JP Morgan employees were well compensated for their crimes.
- Defendant Smith earned $9,890,044 in total (salary plus bonus) compensation;
- Defendant Nowak earned $23,700,074;
- Defendant Ruffo earned $10,425,064;
- Defendant Jordan earned $1,125,016 (2008–2009 only);
- Donald Turnbull earned $12,727,350;
- Stuart Piller earned $13,289,936;
- Michel Simonian earned $4,515,111 (2008–2014 only);
- John Edmonds earned $1,996,064 in total; and
- Christian Trunz earned $2,720,049.
The systemic and widespread fraud at the JP Morgan Trading Desk is just one example of the corruption that continues to plague the finance industry. This corruption has likely contributed to the creation of the most recent recession, bear market, and related financial uncertainty in global financial markets.
The convictions and guilty pleas so far have shown that skirting the law has been part of the day-to-day business operations embedded within the organization’s workflow without any checks and balances.
According to public records, news articles, and other information, JP Morgan Chase, under the leadership of Dimon, has a long history of paying criminal penalties resulting from large-scale crimes and financial fraud.
While Dimon himself has not been directly involved in any of the recent criminal investigations, his compensation is tied directly to the company’s performance, and he personally profited from millions of dollars in bonuses during those years.
Investigations involving major Wall Street and Global Banks’ precious metals traders have resulted in criminal admissions and financial penalties for engaging in similar schemes.
The price manipulation schemes occurred in the paper trading markets, driving the physical prices of precious metals.