A multi-year investigation by the Justice Department has resulted in the convictions of two key leaders from the Precious Metals Trading Desk at JP Morgan Chase.
The two defendants, Michael Nowak and Gregg Smith were convicted by jury of wire fraud, attempted price manipulation, commodities fraud, and price spoofing involving a scheme that spanned for more than ten years and involved.
The crimes occurred during a span 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 plead guilty.
The guilty pleas and these most recent convictions provide proof to the long held belief that major Wall Street banks have been systematically manipulating the futures prices for profit.
JP Morgan Chase is also a major trustee and depository for major exchanges such as COMEX and others.
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 of the trades occurred prior to changes in the law in 2010, the Executives, Directors, Managers and Traders from the precious metals desk at JP Morgan Chase were 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 evidence that is publicly available, but it is reasonable to speculate that the overall value of the price manipulation fraud cost 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 which has likely been contributor to the creation of the most recent recession, bear market and related financial uncertainty in global financial markets.
The convictions and guilty please so far have shown that skirting the law has been part of the day-to-day business operations embedded within the workflow of the organization 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 that have resulted from large scale crimes and financial fraud.
While Dimon himself has not been caught up directly in any of the recent criminal investigations, his compensation is tied directly to the performance of the company and he personally profited 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 which drives the physical prices of precious metals.
