Two former precious metals traders at JPMorgan Chase and a co-worker who handled hedge fund clients face trial starting 8 July in the climax of a seven-year Justice Department campaign to punish alleged market manipulation.
The criminal trial in Chicago is the third in two years to focus on a style of deceptive trading known as spoofing. Prosecutors have alleged that former members of JPMorgan’s precious metals desk routinely sent orders they intended to quickly cancel to rig the price of gold and silver futures contracts, earning big profits for the bank over eight years.
JPMorgan paid $920m in 2020 to resolve regulatory and criminal charges over the conduct, which involved nine futures traders and at least two salespeople who dealt with clients, according to court records. Three men cooperated with the Justice Department’s investigation and will testify against the three defendants: Gregg Smith and Michael Nowak, who traded gold and silver futures; and Jeffrey Ruffo, who dealt with hedge funds that relied on JPMorgan to execute their metals trades.
Smith had worked at Bear Stearns before joining JPMorgan in 2008 when the bank acquired Bear in a fire sale precipitated by the financial crisis. Nowak traded for JPMorgan in both London and New York. Ruffo worked at the bank for a decade, communicating with hedge funds that were brokerage clients and providing the desk with important market intelligence, according to prosecutors. All three have pleaded not…
