By Jody Godoy
(Reuters) – A U.S. prosecutor urged a jury to convict three former JPMorgan Chase & Co employees on conspiracy and racketeering charges on Thursday, saying they engaged in a yearslong scheme to manipulate the market for precious metals futures.
Prosecutor Matthew Sullivan told jurors in Chicago the bank’s former global precious metals desk head Michael Nowak, precious metals trader Gregg Smith and salesperson Jeffrey Ruffo conspired to defraud market participants via a manipulative trading tactic known as spoofing.
“The defendants had power and influence, and together they abused their positions and rigged the precious metals markets for their own gain,” he said.
The trial, which began July 8, is part of the U.S. Justice Department’s broader crackdown on spoofing: placing and then quickly canceling buy or sell orders to create the illusion of demand or supply.
The three men are accused of a scheme to use the tactic to manipulate futures on metals such as gold, silver, platinum and palladium between 2008 and 2016.
In addition to racketeering and conspiracy, Nowak faces 13 other charges including fraud, spoofing and attempted market manipulation, and Smith faces 11 additional charges.
All three defendants have pleaded not guilty. Attorneys for Nowak and Smith argued their orders were not fraudulent. Ruffo was not a trader, and there is no evidence that he understood others were using illicit tactics, his attorney said during opening arguments.
Christopher Jordan, a trader who left JPMorgan in 2009, has also been charged and will be tried separately.
Commodities manipulation and in particular spoofing have become a major focus of the Justice Department, which has brought several other cases in recent years, including against NatWest and former traders at Deutsche Bank and UBS.
JPMorgan also agreed in 2020 to pay more than $920 million and admitted to wrongdoing to settle with the DOJ and Commodity Futures Trading Commission over the conduct of the traders who have been charged.
(Reporting by Jody Godoy in New York; Editing by David Gregorio)
