Prospecting & Detecting

Traders At JPMorgan Chase Indicted For Rigging Metal Prices

October 2019 by Scott

The Department of Justice announced three traders at JPMorgan Chase have been indicted for manipulating precious metals prices.

Those indicted include Michael Nowak, age 45, Gregg Smith, age 55, and 47-year-old Christopher Jordan, all of New Jersey.

The indictment alleges the three men conspired to manipulate commodity prices over an eight-year span. They are being charged under the Racketeer Influenced and Corrupt Organizations (RICO) Act, which was originally designed for taking down the mafia.

Gregg Smith is an active trader for JPMorgan Chase; Christopher Jordan left the company in 2009.

Michael Nowak was in charge of the global precious metals desk for the company and a member of the board of the London Bullion Market Association (LBMA) and serves on the committee for the London Metal Exchange (LME).

Benchmark futures prices are set twice each business day following a conference call between members of the London Gold Market Fixing group. JPMorgan Chase is one of the 12 members of that group.

The complaint states the three men “engaged in widespread spoofing, market manipulation and fraud while working on the precious metals desk...through the placement of orders they intended to cancel before execution (Deceptive Orders) in an effort to create liquidity and drive prices toward orders they wanted to execute on the opposite side of the market. In thousands of sequences, the defendants and their co-conspirators allegedly placed Deceptive Orders for gold, silver, platinum and palladium futures contracts traded on the New York Mercantile Exchange (NYMEX) and Commodity Exchange (COMEX), which are commodities exchanges operated by CME Group Inc.”

Assistant Attorney General Brian Benczkowski stated the men sought to “inject false and misleading information about the genuine supply and demand for precious metals futures contracts into the markets, and to deceive other participants in those markets into believing something untrue, namely that the visible order book accurately reflected market-based forces of supply and demand.”

“Today’s announcement involves the alleged manipulation of gold, silver, platinum, and palladium futures prices, by executives and traders, at one of this country’s premier financial institutions,” said Benczkowski. “These precious metals are widely used for investment and industrial purposes, and they are key benchmarks for the US economy.”

The complaint indicates there were “co-conspirators,” so we may see additional names announced at a future date. Benczkowski stated the Justice Department has several cooperating witnesses, including other JPMorgan Chase employees.

Our readers may remember a series of articles we published on the Gold Anti-Trust Action Committee (GATA), a group that formed back in January 1999 to expose manipulation of precious metals market prices by various banks.

Over the years, GATA amassed more than enough information to document the unlawful suppression of prices, but their persistent calls for investigation were continually ignored by the Department of Justice. It appears they finally reached someone in the current administration who was willing to take action.

Many commodity experts have argued that, based on supply and demand, gold and silver prices should be much higher than they are presently. We’ll have to wait and see what impact this RICO case has on current and future prices. In the meantime, we applaud GATA for their unwavering commitment to exposing this fraud.