The U.S. Department of Justice (DOJ) says that two former JPMorgan Chase precious metals traders have been sentenced to prison for engaging in schemes to manipulate the market.
In a press release, the DOJ says that ex-JPMorgan precious metal directors Gregg Smith and Michael Nowak rigged the markets by taking part in unlawful trading practices that involved spoofing, market manipulation and fraud.
According to the DOJ, Smith and Nowak ran a market manipulation scheme known as spoofing for a period of over eight years between May 2008 to August 2016.
Spoofing is an illegal trading practice that involves the placement of orders that are intended to be canceled to create a false perception of demand or supply.
The DOJ says that Smith and Nowak used spoofing to drive prices to their desired levels before executing actual trades.
The DOJ also says that Smith and Nowak engaged in tens of thousands of deceptive trades through the New York Mercantile Exchange and the Commodity Exchange that led to $10 million in losses to market participants.
Says Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division,
“The defendants used their positions as some of the most powerful traders in the worldwide precious metals markets to engage in an egregious effort to manipulate prices for their benefit.”
For their crimes, Smith received a two-year prison sentence along with a $50,000 fine and Nowak was sentenced to one year and one day in prison with a $35,000 fine.
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