Former JPMorgan traders abused their positions, prosecutor says as racketeering trial closes
July 28 (Reuters) – A U.S. prosecutor on Thursday asked a jury to convict three former JPMorgan Chase & Co (JPM.N) employees of conspiracy and racketeering, saying they engaged in a year-long scheme aimed at manipulating the precious metals futures market.
Prosecutor Matthew Sullivan told jurors in Chicago that former head of the bank’s global precious metals office Michael Nowak, precious metals trader Gregg Smith and salesman Jeffrey Ruffo conspired to defraud market participants via a tactic manipulative trading 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 lawsuit, which began July 8, is part of the US Justice Department’s broader crackdown on identity theft: quickly placing and then canceling buy or sell orders to create the illusion of demand or supply.
The three men are accused of a plan 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 counts, including fraud, impersonation and attempted market manipulation, and Smith faces 11 additional counts.
The three defendants have pleaded not guilty. Lawyers for Nowak and Smith argued that their orders were not fraudulent. Ruffo was not a trader and there is no evidence 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.
Commodity manipulation and in particular identity theft have become a major focus of the Justice Department, which has brought several other lawsuits in recent years, including against NatWest and former Deutsche Bank and UBS traders. .
JPMorgan also agreed in 2020 to pay more than $920 million and admitted wrongdoing to settle with the DOJ and the Commodity Futures Trading Commission the conduct of the traders who were charged.
Reporting by Jody Godoy in New York; Editing by David Gregorio
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