Judge gavel, scales of justice and law books in court

A couple of former Wall Street traders have been convicted of fraud and other charges for their roles in attempting to manipulate commodities futures markets.

The two former traders at JPMorgan Chase & Co. — Gregg Smith, 57, executive director and trader on JPMorgan’s precious metals desk in New York, and Michael Nowak, 47, managing director and head of the global precious metals desk — were found guilty by a federal jury in the Northern District of Illinois.

“The evidence at trial showed that between approximately May 2008 and August 2016, the defendants, along with other traders on the JPMorgan precious metals desk, engaged in a widespread spoofing, market manipulation and fraud scheme,” the U.S. Department of Justice (DoJ) said in a release.

Specifically, the traders placed deceptive orders they intended to cancel before trade execution to manipulate the precious metals futures markets.

“The defendants engaged in thousands of deceptive trading sequences for gold, silver, platinum and palladium futures contracts traded through the New York Mercantile Exchange Inc. (NYMEX) and Commodity Exchange Inc. (COMEX),” U.S. authorities said.

Following a three-week trial, each was convicted of one count of attempted price manipulation, one count of spoofing and one count of commodities fraud. Additionally, Smith was convicted of eight counts of wire fraud, and Nowak was convicted of 10 counts of wire fraud. They will be sentenced at a future date.

Previously, two other former JPMorgan traders were convicted in related cases, and the firm admitted to wire fraud in 2020 as part of a deferred prosecution agreement that saw it agree to pay US$920 million in penalties, disgorgement and compensation.

“With this verdict, the Department has secured convictions of ten former traders at Wall Street financial institutions, including JPMorgan, Bank of America/Merrill Lynch, Deutsche Bank, The Bank of Nova Scotia and Morgan Stanley,” said Kenneth Polite, Jr., assistant attorney general of the DoJ’s criminal division.