Original title: Convicted!
"The person who can call the wind and the rain in the gold market" is planted, and the amazing manipulation methods are exposed
Recently, the "gold and silver manipulation case" of JPMorgan Chase, which shocked the world, has made important progress.
After a three-week trial and eight days of deliberation, a Chicago federal jury convicted Michael Nowak, former head of JPMorgan Chase's global precious metals division, and precious metals trader Gregg Smith, on charges of deception and wire fraud, according to the U.S. Department of Justice's website. Sexual orders manipulate prices.
U.S. District Court Judge Edmond Chang said Nowak and Smith will be sentenced next year and each could face decades in prison.
He used to be the most powerful person in the gold market
The jury's convictions against Nowak and Smith included price-fixing, deception, wire fraud and other charges, according to the U.S. Department of Justice.
Among them, Smith was convicted of one count of attempted price fixing, one count of deception, one count of commodity fraud and eight counts of wire fraud affecting a financial institution, for a total of 11 counts; Nowak was convicted of one count of attempted price fixing, one count of Thirteen counts of deception, one count of commodity fraud and ten counts of wire fraud affecting a financial institution.
In addition, Jeffrey Ruffo, a former JPMorgan executive director and head of hedge fund sales, was found not guilty.
According to media reports, Nowak was once the gold market's most powerful man who "has some of the largest hedge fund clients" and regularly dominates the order flow for precious metals futures.
"They have the ability to move the market, they have the ability to manipulate the global price of gold," Avi Perry, the prosecutor in the case, said in closing arguments.
U.S. District Court Judge Edmond Chang said Nowak and Smith will be sentenced next year and each could face decades in prison.
Profitable by spoofing
Prosecutors provided evidence, including detailed transaction records, chat logs and testimony from former colleagues who "uncovered" how Nowak and Smith manipulated precious metals prices for profit between 2008 and 2016.
According to the documents, Nowak and Smith used spoofing techniques to buy and sell a large number of gold, silver, platinum, palladium, U.S. Treasuries and U.S. Treasury futures contracts through numerous dealers on the precious metals and U.S. Treasury trading desks. Cancel these orders before executing the trade.
Smith executed about 38,000 tiered manipulative trades over the years; Nowak, who primarily trades options, attempted tiered trades in September 2009 and made about 3,600 manipulative trades since then, the documents show.
In addition, salesman Ruffo needs to tell Smith where to enter the market and then proceed to fill orders for at least two hedge fund clients.
FBI investigator Marc Troiano told the court, citing internal JPMorgan data, that employee compensation was tied to performance.
The data shows that from 2008 to 2016, Nowak made a cumulative profit of 186 million US dollars for the company, Smith earned about 117 million US dollars in profits, and Ruffo earned 70.3 million US dollars.
From 2008 to 2016, Nowak was paid $23.79 million, Smith and Ruffo were paid $9.9 million and $10.5 million, respectively.
According to industry insiders, "spoofing" is a financial term, which refers to an act of making false quotations and then canceling orders in stock market or futures market transactions: that is, placing an order first, then canceling the order, thereby affecting the stock price.
"Spoofers" influence the market by pretending to be intentional to buy or sell at a specific price, creating the illusion of demand in an attempt to lure other traders into trading.
Through this "spoofing" behavior, the "spoofer" can buy or sell at the new price, thereby making a profit.
It is reported that spoofing trades were prevalent on Wall Street and persisted even after they were banned.
Assistant U.S. Attorney Lucy Jennings said in opening arguments last month that so-called "spoofing transactions" accounted for 50% to 70% of the visible gold and silver market at a given time.
JPMorgan Chase paid record fine
It is worth mentioning that in September 2020, JPMorgan admitted transaction fraud and paid a record $920 million in fines.
In September 2020, JPMorgan admitted to committing fraud in: 1. illegal trading in precious metals futures contract markets; and 2. illegal trading in U.S. markets, including U.S. Treasury futures contracts and U.S. secondary (cash) markets.
JPMorgan Chase has since agreed to pay a record $920 million to settle claims by the U.S. Department of Justice, the U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC) over its alleged manipulation of global metals and U.S. Treasury markets through "spoofing" 's investigation.
According to a statement released by the CFTC, this is the agency's largest fine for spoofing this market manipulation.
The $920 million includes $436.4 million in fines, $311.7 million in damages and more than $172 million in disgorgement.
Chinese law expressly prohibits
my country expressly prohibits market illegal acts such as spoofing.
The "Futures and Derivatives Law of the People's Republic of China" implemented on August 1 this year clearly stipulates that "frequent or large declarations and cancellation of declarations are not for the purpose of transaction".
Among them, Article 6 stipulates that futures trading and derivatives trading activities shall abide by laws, administrative regulations and relevant state regulations, follow the principles of openness, fairness and impartiality, and prohibit fraud, market manipulation and insider trading.
Article 12 stipulates that no unit or individual may manipulate the futures market or the derivatives market.
It is prohibited to manipulate the futures market by the following means, affecting or intending to affect the futures trading price or futures trading volume, including "frequent or large number of declarations and cancellation of declarations without the purpose of transaction".
Article 20 stipulates that if a trader entrusts a futures business institution to conduct trading, he or she may issue trading instructions by means of writing, telephone, self-service terminal, or the Internet.
Trading instructions should be clear, specific and comprehensive.
Article 21: Programmatic transactions that are automatically generated or issued by computer programs shall comply with the provisions of the futures regulatory authority under the State Council, and shall be reported to the futures trading venue, and shall not affect the system security or normal trading order of the futures trading venue. .