From 2008 to 2016, Michael Nowak, Gregg Smith, and Christopher Jordan were involved in placing thousands of scam orders into the precious metals markets in order to “trick” rival traders into buying or selling with them, the criminal indictment from the DOJ reads.
The DOJ claimed the bankers made millions of dollars by defrauding other market participants, including some of their own clients, in thousands of illegal trade sequences. The traders used an illegal tactic called “spoofing,” where they flooded markets with a mix of real and false orders to buy and sell futures contracts on the metals in order to give a false impression about the true supply and demand, according to the indictment. They were openly discussing their illegal behaviour in chat logs obtained by the prosecution and included in the indictment.
They are charged with bank, wire, and commodities fraud, price manipulation and spoofing, and “conspiracy to conduct the affairs of an enterprise involved in interstate or foreign commerce through a pattern of racketeering activity” – a charge usually reserved for members of an organized crime ring.
Nowak, 45, and Smith, 55, are still employed at the bank, but are reportedly on leave. Jordan, 47, left the bank in 2009.
“It’s truly regrettable that the DOJ decided to go forward with a prosecution of Mike Nowak, who has done nothing wrong,” Nowak’s lawyers, David Meister and Jocelyn Strauber, told The New York Post in a statement. “We look forward to representing him at trial and expect him to be fully exonerated.”
The case is being handled in Chicago federal court where CME Group, a futures trading exchange, is located. Smith will be presented Monday in White Plains federal court. Nowak, of Montclair, NJ, and Jordan, of Mountainside, NJ, will be presented Monday in Newark federal court.
A spokesman for JPMorgan declined to comment. The bank previously disclosed the investigation into its commodities trading in regulatory documents. Earlier in November, another JPMorgan trader, Jonathan Edmonds, pleaded guilty to spoofing charges, and another trader, Christian Trunz, pleaded guilty to fraud charges and said he is cooperating with the DOJ.
