On Monday this week, US federal prosecutors announced indictments of three JPMorgan Chase precious metals traders. They are charged with participating in a racketeering conspiracy over eight years, from 2008 to 2016, to manipulate precious metals prices.
As a result of such manipulation, the bank earned profits while its customers suffered losses.
The three who were charged were Michael Nowak, Gregg Smith, and Christopher Jordan. Smith and Jordan were formerly managing directors at JPMorgan Chase and traded precious metals for the bank. Nowak currently is a managing director at the bank and is head of the bank’s global precious metals trading activities. Nowak has worked for the bank since 1996 until placed on leave last month. Smith began working for the bank in 2008 when the bank acquired defunct brokerage Bear Sterns. He was put on leave just before his indictment. Jordan worked for the bank from 2006 to 2009 and has since worked at Credit Suisse and First New York Securities.
The information that formed the basis of the indictments came out following convictions within the past year of former JPMorgan Chase precious metals traders John Edmonds and Christian Trunz. As part of their plea bargains, these men have been cooperating with further investigations by the Department of Justice.
A major activity for which all of these individuals were charged was for “spoofing." Spoofing involves the posting of buy and sell orders that were never intended to be executed. Instead, they were fictitious signals, pretending to be genuine, of excess supplies which could drive down prices or strong demand which might boost prices. Such market-distorting actions skewed the markets for gold, silver, platinum, and palladium.
Of particular importance was the charges against Nowak, who happens to be a member of the board of directors of the London Bullion Market Association (LBMA). The LBMA conducts the worlds largest precious metals trading platforms. LBMS CEO Ruth Crowell has stated that the organization “claims to be the world’s authority on precious metals,” and “the standard-setting organization that defines how precious metals are refined as well as traded around the world.”
Crowell further stated that the job of the LMBA was, “to ensure the quality of the metal itself as well as the market participants. LBMA members pledge not to manipulate or rig markets.
These newest developments for actions taken in the past decade or so are continuing examples of the manipulation of precious metals markets that has been going on since at least the 1930s. For instance, review my column here from five weeks ago on the failure of the 1960s London Gold Pool at https://www.numismaticnews.net/article/the-failure-of-the-1960s-london-gold-pool.
Among other recent instances of admitted precious metals market manipulations are Deutsche Bank for rigging gold and silver prices, the ScotiaMocatta division formerly of the Bank of Nova Scotia, as well as charges against Barclays PLC in Great Britain, HSBC PLC, and mega-French bank Societe Generale SA.
Meanwhile, as all these charges and convictions for precious metals market manipulation are piling up, the U.S. government and the U.S. Commodities Futures Trading Commission continue to claim there is no rigging of these markets.
Patrick A. Heller was the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award 2012 Harry Forman National Dealer of the Year Award, and 2008 Presidential Award winner. Over the years, he has also been honored by the Numismatic Literary Guild (including twice in 2019), Professional Numismatists Guild, Industry Council for Tangible Assets, and the Michigan State Numismatic Society. He is the communications officer of Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and become part of the audio and text archives posted at http://www.1320wils.com).