Former J.P. Morgan Traders Convicted of Fraud, Attempted Price Manipulation, and Spoofing in a Multi-Year Market Manipulation Scheme
https://www.justice.gov/opa/pr/former-j ... multi-year
JPM
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poniexpress
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Re: JPM
I for one say hurrah that JPM traders have been convicted of Fraud, Attempted Price Manipulation and Spoofing which lasted over a long period of time in the gold markets and JPM had previously paid large fines etc to injured parties as a result.
It has been mooted on discussion boards by shareholders that JPM, for a while, has been manipulating or attempting to manipulate the GGP share price (downwards pressure) either for its own gain or at the behest of a large gold mining company or other organisations largely by spoofing/price manipulation in relation to a short they hold in GGP.
I am not sufficiently qualified to comment on these claims but would mention that many cancelled high value trades (possibly spoofing type) in GGP were put through after hours for a period of time attracting some of the comments. Since these were reported by some to the FCA etc the number of instances have dramatically declined in recent times.
If the board of GGP have any inclination of this type of manipulation was taking place I would hope that they contact the American Authorities (Justice Department) as invited with a view to compensation should there be any foundation to alleged JPM mispractices in relation to GGP.
Looking forward to the upcoming NCM/GGP news flow this year and beyond.
This should not be regarded as financial advice. I am a GGP shareholder.
It has been mooted on discussion boards by shareholders that JPM, for a while, has been manipulating or attempting to manipulate the GGP share price (downwards pressure) either for its own gain or at the behest of a large gold mining company or other organisations largely by spoofing/price manipulation in relation to a short they hold in GGP.
I am not sufficiently qualified to comment on these claims but would mention that many cancelled high value trades (possibly spoofing type) in GGP were put through after hours for a period of time attracting some of the comments. Since these were reported by some to the FCA etc the number of instances have dramatically declined in recent times.
If the board of GGP have any inclination of this type of manipulation was taking place I would hope that they contact the American Authorities (Justice Department) as invited with a view to compensation should there be any foundation to alleged JPM mispractices in relation to GGP.
Looking forward to the upcoming NCM/GGP news flow this year and beyond.
This should not be regarded as financial advice. I am a GGP shareholder.
Re: JPM.....
How the US Toppled the World's Most Powerful Gold trader
By Eddie Spence, Joe Deaux and Tom Schoenberg
(Bloomberg) -- In December 2018, a man in his early 30s was
intercepted on arrival at Fort Lauderdale airport and taken to a
room where two FBI agents sat waiting.
The target was scared and already on high alert — one of
his associates had recently admitted to crimes he knew he'd also
committed. Christian Trunz wasn’t a terrorist or a drug
trafficker, but a mid-level trader of precious metals returning
from his honeymoon. Crucially: he was also a longstanding
employee of JPMorgan Chase & Co., the biggest bullion bank.
The FBI’s airport ambush described by Trunz was a crucial
step in the pursuit by US prosecutors of JPMorgan’s precious
metals desk, leading up to last week’s climax — the conviction
on 13 counts of the man who was once the most powerful figure in
the gold market, the desk’s former global head Michael Nowak.
Watched with a mixture of fascination and horror by
precious metals traders around the world, the case has shone a
light on how JPMorgan’s traders — including Nowak and the bank’s
long-time lead gold trader Gregg Smith — for years allegedly
manipulated markets by placing bogus orders designed to
wrongfoot other market participants, principally algorithmic
traders whose high-speed activity became a major source of
frustration.
Nowak has become one of the most senior bankers to be
convicted in the US since the financial crisis, and faces the
prospect of decades in prison, although it could be far less.
Read: JPMorgan Gold Traders Found Guilty After Long
Spoofing Trial Nowak’s lawyers contend Nowak wasn’t a “criminal
mastermind” and said they will “continue to vindicate his rights
in court.” A lawyer for Smith said during closing arguments last
month that his client’s orders were legitimate, and there are
other explanations to buy and sell futures contracts at the same
time on behalf of customers.
It took three weeks in court for the government to persuade
a jury of Nowak and Smith’s guilt. (Jeffrey Ruffo, a salesman
who was tried with them, was acquitted.)
But whispers of spoofing had hung over JPMorgan’s trading
desk for at least a decade — many years before the FBI first
approached Trunz in 2018.
Alex Gerko, the head of an algorithmic trading firm,
complained about Smith’s activity in the gold market as early as
2012 to CME Group Inc., which owns the futures exchanges where
the US alleged thousands of spoof trades took place. But Smith
and Nowak continued working at the bank until 2019, when the US
unsealed charges against them.
“The wheels of justice are moving, slowly,” Gerko tweeted
last month.
At the Justice Department, the road to JPMorgan began with
a decision to begin hunting down traders who made bogus offers
to buy and sell commodities that they never intended to execute.
The criminal fraud unit hired data consultants to go through
billions of lines of trades to spot patterns of market
manipulators.
As the vast quantities of data was scrutinized, there were
certain traders that stood out. And they worked at JPMorgan.
With the data in hand, investigators went looking for
cooperators, which they found in Trunz and his former colleague
John Edmonds. Both relatively junior traders pleaded guilty to
their own misconduct and agreed to testify against the desk’s
boss.
Nowak was arrested in September 2019, sending a shock wave
through the metals world, but the Covid pandemic meant it would
be another three years until the trial finally took place.
In his testimony, Edmonds, who’d started in an operations
role at JPMorgan, described spoofing on the desk as a daily
phenomenon and felt obliged to take part because it was part of
the normal strategy.
Read: JPMorgan Gold Desk ‘Spoofing’ Cheated Market, Ex-
Trader Says The Justice Department’s move against JPMorgan’s most
senior bullion bankers was celebrated in some corners of the
gold and silver markets, where investors and bloggers have long
accused the bank of a large-scale scheme to manipulate prices
lower. Those allegations prompted multiple investigations by the
Commodity Futures Trading Commission, the most recent of which
was closed in 2013 after finding no evidence of wrongdoing.
The case against Nowak and Smith made no allegations of a
systematic plot to suppress prices, instead arguing that they
spoofed markets over very short periods of time, and in both
directions, to benefit JPMorgan's most important hedge fund
clients.
And while the convictions are a victory for the prosecutors, the jury rejected the government’s most sweeping
charges — brought under the Racketeer Influenced and Corrupt
Organizations Act, or RICO — that the men were part of a
conspiracy and that JPMorgan’s precious metals desk was a
criminal enterprise.
At JPMorgan, Edmonds said the practice was referred to as
“clicking” rather than spoofing, and the traders never discussed
it as being illegal despite the firm’s own compliance policies
making it plain. Trunz even spoke of a running joke involving
Smith, who would click his mouse so fast to place and cancel
orders that his colleagues would urge him to put ice on his
fingers.
In 2012, Gerko, who is the founder of quantitative trading
firm XTX Markets Ltd., complained to the CME about Smith’s
trading in gold futures by rapidly entering and canceling
orders. The CME began an investigation, which dragged on for
three years before concluding he’d likely been spoofing.
“It took a long time after 2010 to get consistent
enforcement,” Gerko said in a tweet, referring to the Dodd-Frank
act in which spoofing was defined and made illegal.
After another JPMorgan trader, Michel Simonian, was fired
in 2014 for spoofing, Nowak called his traders into his office
to ask if they'd been doing the same, according to Edmonds. No
one said anything. The incident shocked Edmonds, he said, as
Nowak knew it had been going on for years.
During the trial, Nowak appeared largely impassive, his
face hidden behind a Covid mask. Industry insiders described him
in 2020 as introverted and brainy, and testimony during the
trial painted him as a well-liked manager, who became friendly
with Trunz while the two did a stint working out of JPMorgan’s
London office.
During trial, Trunz was asked whether he liked Nowak, the
former trader responded: "I loved him."
However, the relationship became more complicated after
Trunz was approached by authorities. When he contemplated making
a deal with the government, Nowak told him not to, according to
Trunz, who became audibly choked up as he gave the testimony.
Defense lawyers painted Trunz and Edmonds as unreliable —
proven liars who were testifying against their clients in order
to avoid lengthy prison sentences.
Read: JPMorgan Gold Trader Says Boss Coached Him on
Spoofing Lie
Nowak and Smith won’t be sentenced until next year. For
comparison, two Deutsche Bank AG traders convicted of spoofing
in 2020 were each sentenced to about a year in prison.
Last week’s conviction represents the pinnacle of the US
Justice Department’s crackdown on the illegal trading practice
known as spoofing. So far, prosecutors have managed to convict
ten traders at five different banks.
JPMorgan has already paid $920 million to settle spoofing
allegations against it. “Even though the jury rejected the conspiracy and RICO
charges, they will consider this a win,” said Matthew Mazur, an
attorney at Dechert LLP who defended one of the Deutsche Bank
traders. “This is probably the end of the precious metals sweep
that was done, but I do think there will continue to be cases.”
Even after the crackdown, some market participants say
spoofing still takes place. Back when commodity futures traded
in the pits, brokers had to trade face-to-face. Hiding behind a
screen makes it much easier to place and pull orders at will.
“We still see spoofing on a regular basis,” said Eric
Zuccarelli, an independent commodities trader who began working
on the floor of the New York Mercantile Exchange in 1986. “But
back then if a person spoofed everybody would come over and
punch you in the face and the floor committee would come over
and fine you for being an asshole.”
--With assistance from Yvonne Yue Li.
By Eddie Spence, Joe Deaux and Tom Schoenberg
(Bloomberg) -- In December 2018, a man in his early 30s was
intercepted on arrival at Fort Lauderdale airport and taken to a
room where two FBI agents sat waiting.
The target was scared and already on high alert — one of
his associates had recently admitted to crimes he knew he'd also
committed. Christian Trunz wasn’t a terrorist or a drug
trafficker, but a mid-level trader of precious metals returning
from his honeymoon. Crucially: he was also a longstanding
employee of JPMorgan Chase & Co., the biggest bullion bank.
The FBI’s airport ambush described by Trunz was a crucial
step in the pursuit by US prosecutors of JPMorgan’s precious
metals desk, leading up to last week’s climax — the conviction
on 13 counts of the man who was once the most powerful figure in
the gold market, the desk’s former global head Michael Nowak.
Watched with a mixture of fascination and horror by
precious metals traders around the world, the case has shone a
light on how JPMorgan’s traders — including Nowak and the bank’s
long-time lead gold trader Gregg Smith — for years allegedly
manipulated markets by placing bogus orders designed to
wrongfoot other market participants, principally algorithmic
traders whose high-speed activity became a major source of
frustration.
Nowak has become one of the most senior bankers to be
convicted in the US since the financial crisis, and faces the
prospect of decades in prison, although it could be far less.
Read: JPMorgan Gold Traders Found Guilty After Long
Spoofing Trial Nowak’s lawyers contend Nowak wasn’t a “criminal
mastermind” and said they will “continue to vindicate his rights
in court.” A lawyer for Smith said during closing arguments last
month that his client’s orders were legitimate, and there are
other explanations to buy and sell futures contracts at the same
time on behalf of customers.
It took three weeks in court for the government to persuade
a jury of Nowak and Smith’s guilt. (Jeffrey Ruffo, a salesman
who was tried with them, was acquitted.)
But whispers of spoofing had hung over JPMorgan’s trading
desk for at least a decade — many years before the FBI first
approached Trunz in 2018.
Alex Gerko, the head of an algorithmic trading firm,
complained about Smith’s activity in the gold market as early as
2012 to CME Group Inc., which owns the futures exchanges where
the US alleged thousands of spoof trades took place. But Smith
and Nowak continued working at the bank until 2019, when the US
unsealed charges against them.
“The wheels of justice are moving, slowly,” Gerko tweeted
last month.
At the Justice Department, the road to JPMorgan began with
a decision to begin hunting down traders who made bogus offers
to buy and sell commodities that they never intended to execute.
The criminal fraud unit hired data consultants to go through
billions of lines of trades to spot patterns of market
manipulators.
As the vast quantities of data was scrutinized, there were
certain traders that stood out. And they worked at JPMorgan.
With the data in hand, investigators went looking for
cooperators, which they found in Trunz and his former colleague
John Edmonds. Both relatively junior traders pleaded guilty to
their own misconduct and agreed to testify against the desk’s
boss.
Nowak was arrested in September 2019, sending a shock wave
through the metals world, but the Covid pandemic meant it would
be another three years until the trial finally took place.
In his testimony, Edmonds, who’d started in an operations
role at JPMorgan, described spoofing on the desk as a daily
phenomenon and felt obliged to take part because it was part of
the normal strategy.
Read: JPMorgan Gold Desk ‘Spoofing’ Cheated Market, Ex-
Trader Says The Justice Department’s move against JPMorgan’s most
senior bullion bankers was celebrated in some corners of the
gold and silver markets, where investors and bloggers have long
accused the bank of a large-scale scheme to manipulate prices
lower. Those allegations prompted multiple investigations by the
Commodity Futures Trading Commission, the most recent of which
was closed in 2013 after finding no evidence of wrongdoing.
The case against Nowak and Smith made no allegations of a
systematic plot to suppress prices, instead arguing that they
spoofed markets over very short periods of time, and in both
directions, to benefit JPMorgan's most important hedge fund
clients.
And while the convictions are a victory for the prosecutors, the jury rejected the government’s most sweeping
charges — brought under the Racketeer Influenced and Corrupt
Organizations Act, or RICO — that the men were part of a
conspiracy and that JPMorgan’s precious metals desk was a
criminal enterprise.
At JPMorgan, Edmonds said the practice was referred to as
“clicking” rather than spoofing, and the traders never discussed
it as being illegal despite the firm’s own compliance policies
making it plain. Trunz even spoke of a running joke involving
Smith, who would click his mouse so fast to place and cancel
orders that his colleagues would urge him to put ice on his
fingers.
In 2012, Gerko, who is the founder of quantitative trading
firm XTX Markets Ltd., complained to the CME about Smith’s
trading in gold futures by rapidly entering and canceling
orders. The CME began an investigation, which dragged on for
three years before concluding he’d likely been spoofing.
“It took a long time after 2010 to get consistent
enforcement,” Gerko said in a tweet, referring to the Dodd-Frank
act in which spoofing was defined and made illegal.
After another JPMorgan trader, Michel Simonian, was fired
in 2014 for spoofing, Nowak called his traders into his office
to ask if they'd been doing the same, according to Edmonds. No
one said anything. The incident shocked Edmonds, he said, as
Nowak knew it had been going on for years.
During the trial, Nowak appeared largely impassive, his
face hidden behind a Covid mask. Industry insiders described him
in 2020 as introverted and brainy, and testimony during the
trial painted him as a well-liked manager, who became friendly
with Trunz while the two did a stint working out of JPMorgan’s
London office.
During trial, Trunz was asked whether he liked Nowak, the
former trader responded: "I loved him."
However, the relationship became more complicated after
Trunz was approached by authorities. When he contemplated making
a deal with the government, Nowak told him not to, according to
Trunz, who became audibly choked up as he gave the testimony.
Defense lawyers painted Trunz and Edmonds as unreliable —
proven liars who were testifying against their clients in order
to avoid lengthy prison sentences.
Read: JPMorgan Gold Trader Says Boss Coached Him on
Spoofing Lie
Nowak and Smith won’t be sentenced until next year. For
comparison, two Deutsche Bank AG traders convicted of spoofing
in 2020 were each sentenced to about a year in prison.
Last week’s conviction represents the pinnacle of the US
Justice Department’s crackdown on the illegal trading practice
known as spoofing. So far, prosecutors have managed to convict
ten traders at five different banks.
JPMorgan has already paid $920 million to settle spoofing
allegations against it. “Even though the jury rejected the conspiracy and RICO
charges, they will consider this a win,” said Matthew Mazur, an
attorney at Dechert LLP who defended one of the Deutsche Bank
traders. “This is probably the end of the precious metals sweep
that was done, but I do think there will continue to be cases.”
Even after the crackdown, some market participants say
spoofing still takes place. Back when commodity futures traded
in the pits, brokers had to trade face-to-face. Hiding behind a
screen makes it much easier to place and pull orders at will.
“We still see spoofing on a regular basis,” said Eric
Zuccarelli, an independent commodities trader who began working
on the floor of the New York Mercantile Exchange in 1986. “But
back then if a person spoofed everybody would come over and
punch you in the face and the floor committee would come over
and fine you for being an asshole.”
--With assistance from Yvonne Yue Li.
In the end, Truth prevails...
Re: JPM
Thanks Hydrogen. This quote at the end from Eric Zuccarelli made me laugh;
“We still see spoofing on a regular basis,” said Eric
Zuccarelli, an independent commodities trader who began working
on the floor of the New York Mercantile Exchange in 1986. “But
back then if a person spoofed everybody would come over and
punch you in the face and the floor committee would come over
and fine you for being an asshole.”
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poniexpress
- Reactions:
- Posts: 48
- Joined: Mon Jun 27, 2022 8:47 am
- Location: FOD
Re: JPM
Great post Hydrogen,
and thanks Spondy, Made me smile also and 5 different banks convicted so far earlier in same paragraph.
It would seem you have to watch your own back until enough is uncovered before any probe is eventually started but if its hard for the authorities to track/prove what chance does ordinary PIs have?
.
and thanks Spondy, Made me smile also and 5 different banks convicted so far earlier in same paragraph.
It would seem you have to watch your own back until enough is uncovered before any probe is eventually started but if its hard for the authorities to track/prove what chance does ordinary PIs have?
.Re: JPM
Thanks for this.
What is also interesting to me is that JPM have seemingly not increased their 0.50% shorting position in GGP since May 2022 (- verifiable on Shorting Data.com) and yet Ortex shows the shorting value increasing almost daily - so who else is shorting us and why?
Any responses appreciated - Red.
What is also interesting to me is that JPM have seemingly not increased their 0.50% shorting position in GGP since May 2022 (- verifiable on Shorting Data.com) and yet Ortex shows the shorting value increasing almost daily - so who else is shorting us and why?
Any responses appreciated - Red.
Redirons