JPMorgan Chase Trader Pleads Guilty to Gold Manipulation, Turns State's Evidence / Commodities / Market Manipulation
Goldand silver investors got a rare bit of good news on the enforcement front lastweek.
Atrader from JPMorgan Chase pled guilty to rigging the preciousmetals futures markets.
JohnEdmonds admitted to cheating the bank’s clients and plenty of other peoplenaive enough to expect fair treatment on the COMEX and other exchanges.
Whilethis is by no means the first time a banker has been caught cheating, someaspects of this case are certainly worth noting.
Belowis some detail on the who, what, when,why, and how of Mr. Edmonds’ activities at JPMorgan.
As part of his plea,Edmonds admitted that from approximately 2009 through 2015, he conspired withother precious metals traders at the Bank to manipulate the markets for gold,silver, platinum and palladium futures contracts traded on the New York MercantileExchange Inc. (NYMEX) and Commodity Exchange Inc. (COMEX), which arecommodities exchanges operated by CME Group Inc.
Edmonds and his fellowprecious metals traders at the Bank routinely placed orders for precious metalsfutures contracts with the intent to cancel those orders before execution (theSpoof Orders), he admitted.
This trading strategy wasadmittedly intended to inject materially false and misleading liquidity andprice information into the precious metals futures contracts markets by placingthe Spoof Orders in order to deceive other market participants about theexistence of supply and demand. The Spoof Orders were designed to artificiallymove the price of precious metals futures contracts in a direction that wasfavorable to Edmonds and his co-conspirators at the Bank, to the detriment ofother market participants.
In pleading guilty,Edmonds admitted that he learned this deceptive trading strategy from moresenior traders at the Bank, and he personally deployed this strategy hundredsof times with the knowledge and consent of his immediate supervisors.
GuiltyJP Morgan Trader to Rat Out Other Gold Manipulators
Mr.Edmonds is ratting out some fellow traders, including more senior traders andimmediate supervisors. It appears that JPMorgan will have trouble painting himas a “rogue” trader, as so often happens when an employee gets caught.
Maybe,just maybe, the trail uncovered here will lead to a high-level executivespending some time in prison for rigging the metals markets. That would be afirst.
Itis getting harder and harder for futures markets representatives to make thecase that trading is even remotely free or fair. That is a good thing. Wearen’t going to get honest markets in metals until confidence in the existing structurefinally shatters and traders demand something better.
Moreguilty pleas, new convictions and additional evidence of systematic, widespreadcheating is just what is needed for class-action lawsuits.
Ahandful of suits were launched when Deutsche Bank executives admitted to cheating and turned over piles ofevidence in late 2016. Those efforts stand to get a nice boost from the Edmondscase, and perhaps we will see additional classes being formed.
NotwithstandingDOJ's success here, private actions brought in the civil courts are more likelyto hold crooked bankers fully accountable than the regulators who have beentasked with that job. The CFTC has yet to take responsibility for the completeand utter failure, so it is safe to assume that the agency remains captured byWall Street.
Itis telling that CFTC investigators spent five years investigating silver marketmanipulation, four of them during the time that Mr. Edmonds and his accompliceswere operating with impunity at JPMorgan Chase. Yet that investigation wasclosed without single banker being charged with wrongdoing, to the dismay ofsilver and gold market whistle-blowers everywhere.
By Clint Siegner
Clint Siegner is a Director at MoneyMetals Exchange,perhaps the nation's fastest-growing dealer of low-premium precious metalscoins, rounds, and bars. Siegner, a graduate of Linfield College in Oregon,puts his experience in business management along with his passion for personalliberty, limited government, and honest money into the development of MoneyMetals' brand and reach. This includes writing extensively on the bullionmarkets and their intersection with policy and world affairs.
© 2018 Clint Siegner - All Rights Reserved
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