JP Morgan precious metals traders charged

JP Morgan

People walk inside JP Morgan headquarters in New York

Prosecutors said this trading style "took hold of the precious metals desk" at JPMorgan and was adopted by Nowak and other conspirators.

The unsealed indictment alleges a racketeering conspiracy between two current precious-metals traders at JPMorgan, as well as one former employee.

"This false and misleading information was meant to, and at times did, trick other market participants into reacting to the apparent change and imbalance in supply and demand by buying and selling precious metals futures contracts at quantities, prices and times that they otherwise likely would not have traded", the indictment alleges.

Christopher Jordan, 47, who left the company in 2009, was an executive director and trader on JPMorgan's precious metals desk in NY.

The JPMorgan investigation grew out of a multibank US crackdown on manipulation of commodities markets using techniques including spoofing, in which traders place orders without intending to execute them to try to move prices in their favor.

Trunz and the other former JPMorgan trader who admitted guilt said the manipulation was routine, sanctioned by higher-ups and went on for years.

Christian Trunz, who worked at the bank's London, Singapore and NY offices, admitted conspiring with other gold, silver, platinum and palladium traders to place hundreds of buy or sell orders that he meant to cancel and not to execute at the time he placed the orders, a practice known as spoofing.

The Justice Department has brought criminal charges against 16 people, including traders who worked for Deutsche Bank AG and UBS Group AG. Seven pleaded guilty, one was convicted at trial and another was acquitted.

Smith, of NY, and Nowak, of New Jersey, were previously placed on leave pending the outcome of the investigation, Reuters reported.

A spokesperson for JPMorgan did not immediately respond to FOX Business's request for comment.

"Today's announcement involves the alleged manipulation of gold, silver, platinum, and palladium futures prices, by executives and traders, at one of this country's premier financial institutions, Assistant Attorney General Brian Benczkowski told reporters Monday".

Another trader, Christian Trunz, pleaded guilty to fraud charges and said he is cooperating with the DOJ.

Smith and Nowak were also each charged with one count of attempted price manipulation, one count of commodities fraud and one count of spoofing.

Already, people inside JPMorgan were using deceptive trading methods, prosecutors said.

The indictment lays out dozens of trades that prosecutors allege are just a tiny fraction of the the thousands of transactions the conspirators made as part of the scheme.

"I was instructed that if a client wished to sell futures I should simultaneously place both bids and offers with the intent of cancelling the bids prior to execution", Edmonds said during his plea hearing.

"We created market activity which artificially drove the sale price up and induced other market participants to purchase at an inflated price", he said. Edmonds entered into a cooperation agreement with the CFTC in July.

An attorney for Gottlieb did not respond to a request for comment.

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