Two present treasured metals merchants and one former dealer within the New York places of work of a U.S. financial institution (Financial institution A) have been charged in an indictment unsealed as we speak for his or her alleged participation in a racketeering conspiracy and different federal crimes in reference to the manipulation of the markets for treasured metals futures contracts, which spanned over eight years and concerned hundreds of illegal buying and selling sequences.
Charged within the indictment are:
Gregg Smith, 55, of Scarsdale, New York. Smith was an government director and dealer on Financial institution A’s treasured metals desk in New York. He joined Financial institution A in Might 2008 after it acquired one other U.S. financial institution (Financial institution B).
Michael Nowak, 45, of Montclair, New Jersey. Nowak was a managing director and ran Financial institution A’s international treasured metals desk. He joined Financial institution A in July 1996.
Christopher Jordan, 47, of Mountainside, New Jersey. Jordan joined Financial institution A in March 2006 and was an government director and dealer on Financial institution A’s treasured metals desk in New York. Jordan left Financial institution A in December 2009 and labored as a treasured metals dealer at a Swiss financial institution (Financial institution C) in New York from March 2010 till August 2010. From June 2011 till October 2011, Jordan traded treasured metals futures contracts as an worker of a monetary service firm (Firm D) in New York.
“The defendants and others allegedly engaged in an enormous, multiyear scheme to control the marketplace for treasured metals futures contracts and defraud market members,” mentioned Assistant Legal professional Basic Brian A. Benczkowski. “These expenses ought to go away little doubt that the Division is dedicated to prosecuting those that undermine the investing public’s belief within the integrity of our commodities markets.”
“Smith, Nowak, Jordan, and their co-conspirators allegedly engaged in a fancy scheme to commerce treasured metals in a method that negatively affected the pure steadiness of supply-and-demand,” mentioned FBI Assistant Director in Cost William F. Sweeney Jr. of the FBI’s New York Subject Workplace. “Not solely did their alleged conduct have an effect on the markets for treasured metals, but additionally correlated markets and the purchasers of the financial institution they represented. For so long as we proceed to see any such criminality within the market, we’ll stay devoted to investigating and bringing to justice those that perpetrate these crimes.”
Every of the three defendants was charged with one depend of conspiracy to conduct the affairs of an enterprise concerned in interstate or overseas commerce by a sample of racketeering exercise (extra generally known as RICO conspiracy); one depend of conspiracy to commit wire fraud affecting a monetary establishment, financial institution fraud, commodities fraud, worth manipulation and spoofing; one depend of financial institution fraud and one depend of wire fraud affecting a monetary establishment. As well as, Smith and Nowak have been every charged with one depend of tried worth manipulation, one depend of commodities fraud and one depend of spoofing.
Smith is anticipated to make an preliminary look within the Southern District of New York earlier than U.S. Justice of the Peace Decide Judith C. McCarthy, and Nowak and Jordan are anticipated to make their preliminary appearances within the District of New Jersey earlier than U.S. Justice of the Peace Decide Michael A. Hammer. The case was indicted within the Northern District of Illinois and has been assigned to U.S. District Decide Edmond E. Chang.
As alleged within the indictment, between roughly Might 2008 and August 2016, the defendants and their co-conspirators have been members of Financial institution A’s international treasured metals buying and selling desk in New York, London and Singapore with various levels of seniority and supervisory duty over others on the desk. Because it pertains to the RICO conspiracy, the defendants and their co-conspirators have been allegedly members of an enterprise—specifically, the valuable metals desk at Financial institution A—and performed the affairs of the desk by a sample of racketeering exercise, particularly, wire fraud affecting a monetary establishment and financial institution fraud.
The indictment alleges that the defendants engaged in widespread spoofing, market manipulation and fraud whereas engaged on the valuable metals desk at Financial institution A by the position of orders they supposed to cancel earlier than execution (Misleading Orders) in an effort to create liquidity and drive costs towards orders they needed to execute on the alternative facet of the market. In hundreds of sequences, the defendants and their co-conspirators allegedly positioned Misleading Orders for gold, silver, platinum and palladium futures contracts traded on the New York Mercantile Change Inc. (NYMEX) and Commodity Change Inc. (COMEX), that are commodities exchanges operated by CME Group Inc. By inserting Misleading Orders, the defendants and their co-conspirators allegedly supposed to inject false and deceptive details about the real provide and demand for treasured metals futures contracts into the markets, and to deceive different members in these markets into believing one thing unfaithful, specifically that the seen order guide precisely mirrored market-based forces of provide and demand. This false and deceptive info was supposed to, and at occasions did, trick different market members into reacting to the obvious change and imbalance in provide and demand by shopping for and promoting treasured metals futures contracts at portions, costs and occasions that they in any other case probably wouldn’t have traded, the indictment alleges.
As additionally alleged within the indictment, the defendants and their co-conspirators defrauded Financial institution A’s purchasers who had purchased or offered “barrier choices” by buying and selling treasured metals futures contracts in a fashion that tried to push the value in the direction of a worth degree at which Financial institution A would make cash on the choice (barrier-running), or away from a worth degree at which Financial institution A would lose cash on the choice (barrier-defending). Particularly, when barrier-running, the defendants and their co-conspirators would allegedly place orders for treasured metals futures contracts in a method that was supposed to intentionally set off the barrier possibility held by Financial institution A. Conversely, when barrier-defending, the defendants and their co-conspirators would allegedly place orders for treasured metals futures contracts in a method that was supposed to intentionally keep away from triggering the barrier possibility held by purchasers of Financial institution A.
The indictment additionally identifies two former Financial institution A treasured metals merchants, John Edmonds and Christian Trunz, as being among the many defendant’s co-conspirators. Edmonds labored at Financial institution A from 2004 to 2017 and was a dealer on Financial institution A’s treasured metals desk, leaving as a vice chairman. On Oct. 9, 2018, Edmonds pleaded responsible within the District of Connecticut to an info charging him with one depend of commodities fraud and one depend of conspiracy to commit wire fraud, commodities fraud, worth manipulation and spoofing. Trunz is a former treasured metals dealer at Financial institution A who labored on the financial institution from 2007 to August 20, 2019, leaving as an government director. On Aug. 20, 2019, Trunz pleaded responsible within the Jap District of New York to an info charging him with one depend of conspiracy to interact in spoofing and one depend of spoofing.
This case is the results of an ongoing investigation by the FBI’s New York Subject Workplace. The Commodity Futures Buying and selling Fee’s Division of Enforcement supplied help on this case. Trial Attorneys Avi Perry and Matthew F. Sullivan of the Felony Division’s Fraud Part are prosecuting the case.
The fees within the indictment are merely allegations, and the defendants are presumed harmless till confirmed responsible past an inexpensive doubt in a courtroom of legislation.
People who imagine that they could be a sufferer in these instances ought to go to the Fraud Part’s Sufferer Witness web site for extra info at https://www.justice.gov/criminal-fraud/victim-witness-program.
Editor’s Be aware: Hyperlinks to varied DOJ paperwork pertaining to this press launch may be discovered right here: https://www.justice.gov/opa/pr/current-and-former-precious-metals-traders-charged-multi-year-market-manipulation