Gregg Smith, 59, of Scarsdale, New York, was sentenced to two years in prison and a $50,000 fine while Michael Nowak, 49, of Montclair, New Jersey, was sentenced to one year and one day in prison and a $35,000 fine, the Justice Department said.
Prosecutors originally sought a sentence of five years behind bars for Michael Nowak, who ran JPMorgan’s precious-metals trading desk, and six years for Gregg Smith, the bank’s top gold trader.
The JPMorgan case was part of a crackdown by federal prosecutors on illegal spoofing, where traders place bogus orders to move prices up or down and then quickly cancel them before they can be executed.
Smith and Nowak used the technique to manipulate gold and silver prices from 2008 to 2016.”
In September 2020, JPMorgan admitted to committing wire fraud in connection with (1) unlawful trading in the markets for precious metals futures contracts and (2) unlawful trading in the markets for U.S. Treasury futures contracts and in the secondary (cash) market for U.S. Treasury notes and bonds.
JPMorgan entered into a three-year deferred prosecution agreement pursuant to which it paid more than $920 million in criminal monetary penalties, criminal disgorgement, and victim compensation, with parallel resolutions by the Commodity Futures Trading Commission and the Securities Exchange Commission announced on the same day.
The bank is known too well for these deceptive market strategies.
Big hedge funds like Moore Capital Management and Tudor Capital Corp. were so important to JPMorgan Chase & Co. that its precious-metals traders routinely manipulated gold and silver markets to get the best prices on client orders, a former trader for the bank told a Chicago jury.
“They brought in a huge volume of trading, which made the bank a lot of money and our team a lot of money,” John Edmonds, a former trader on JPMorgan’s precious metals desk, stated in 2022.
Other JPMorgan News
JPMorgan is facing a second massive lawsuit tied to the Jeffrey Epstein case, reports CNN.
“In June, JPMorgan Chase agreed to pay $290 million to settle a class-action lawsuit from Jeffrey Epstein’s alleged sexual abuse victims, who accused the bank of enabling sex trafficking by the deceased financier when he was a client,” said a CNN reporter.
Now the US Virgin Islands is seeking $190 million in penalties and disgorgement from JPMorgan Chase and requesting that it implement safeguards against human trafficking in its ongoing case alleging the bank benefited financially from Jeffrey Epstein’s sex trafficking operation and failed to report suspicious financial activity.
The government for the Virgin Islands said in a court filing it also wants JPMorgan Chase to implement an independent compliance consultant to prevent human trafficking and to separate its business and compliance functions.
JPMorgan should also analyze “the root causes of the bank’s failures in its banking relationship with Jeffrey Epstein and identifying the missed opportunities to report his criminal activities,” the Virgin Islands Department of Justice said in a statement.
But the bank disagreed.
“This document does not reflect the nature of settlement conversations,” a spokesperson for JPMorgan Chase said. “As for the USVI’s misdirected damages theories, they are not well founded and are being challenged by JPM in court.”
The policies requested by the Virgin Islands would prevent JPMorgan from opening bank accounts without basic details from customers and ban “the participation of employees with personal relationships to clients in decisions related to retaining those clients,” a government press release indicated.
The Virgin Islands’ government argued that JPMorgan Chase should have given Epstein closer scrutiny as a client after he entered a guilty plea to state charges in Florida of soliciting prostitution with a minor in 2008.
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