Two former precious metals traders at JPMorgan Chase have been sentenced to prison for their involvement in fraud, attempted price manipulation, and spoofing as part of a scheme that lasted over eight years. This fraudulent activity involved tens of thousands of illegal trading sequences, resulting in over $10 million in losses for market participants.
Gregg Smith, the former head of JPMorgan’s global precious metals business, has been sentenced to two years in prison alongside a $50,000 fine. Michael Nowak, the head gold trader, received a sentence of one year and one day in prison and a $35,000 fine.
Acting Assistant Attorney General Nicole Argentieri stated, “The defendants used their positions as some of the most powerful traders in the worldwide precious metals markets to engage in an egregious effort to manipulate prices for their benefit. This case reaffirms the Department’s steadfast commitment to hold accountable those who engage in fraud and manipulation that undermines the investing public’s trust in the integrity of our commodities markets.”
Court documents reveal that between May 2008 and August 2016, Smith and Nowak, along with other traders on JPMorgan’s precious metals desk, participated in widespread spoofing and market manipulation by placing orders and subsequently canceling them to artificially inflate prices.
In total, Smith and Nowak executed tens of thousands of deceptive trading sequences involving futures contracts for gold, silver, platinum, and palladium on the New York Mercantile Exchange and the Commodity Exchange.
In September 2020, JPMorgan admitted to committing wire fraud related to unlawful trading in the markets for precious metals futures contracts, U.S. Treasury futures contracts, and the secondary cash market for U.S. Treasury notes and bonds. The bank entered into a three-year deferred prosecution agreement, paying over $920 million in fines.