Two former precious metal traders at banking giant JPMorgan Chase have been found guilty of an eight-year fraud scheme.

Gregg Smith, 57, of Scarsdale, New York Michael Nowak, 47, of Montclair, New Jersey, were convicted of a multi-year manipulation scheme.

The pair were convicted by a federal jury in the Northern District of Illinois.


Smith was an executive director and trader on JPMorgan’s precious metals desk in New York and Nowak was a managing director and ran JPMorgan’s global precious metals desk.

The court heard how between May 2008 and August 2016 the two, as well as other traders on the precious metals desk, took part in a widespread spoofing, market manipulation and fraud scheme.

They placed orders they intended to cancel before they were complete in order to drive prices up on orders on the other side of the market.

They engaged in thousands of deceptive trading sequences for gold, silver, platinum, and palladium futures contracts traded through the New York Mercantile Exchange Inc and Commodity Exchange Inc. (COMEX), which are commodities exchanges operated by CME Group Inc.


They were intended to inject false and misleading information about the genuine supply and demand for precious metals into the markets.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division said: “Today’s jury verdict demonstrates that those who seek to manipulate our public financial markets will be held accountable and brought to justice.

“With this verdict, the Department has secured convictions of ten former traders at Wall Street financial institutions, including JPMorgan, Bank of America/Merrill Lynch, Deutsche Bank, The Bank of Nova Scotia, and Morgan Stanley.

“These convictions underscore the Department’s commitment to prosecuting those who undermine the investing public’s trust in the integrity of our commodities markets.”

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Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division added: “For years the defendants allegedly placed thousands of false orders for precious metals, creating a ruse that lured others into making disadvantageous trades.

“Today’s conviction demonstrates that no matter how complex or long-running a scheme is, the FBI is committed to bringing those involved in crimes like this to justice.”

Following a three-week trial, Smith was convicted of one count of attempted price manipulation, one count of spoofing, one count of commodities fraud, and eight counts of wire fraud affecting a financial institution.

Nowak was convicted of one count of attempted price manipulation, one count of spoofing, one count of commodities fraud, and 10 counts of wire fraud affecting a financial institution.

Sentencing dates have not been set yet but the pair face lengthy sentences.

Two more precious metals traders John Edmonds and Christian Trunz, were previously convicted in related cases.

In October 2018, Edmonds pleaded guilty in the District of Connecticut to one count of commodities fraud and one count of conspiracy to commit wire fraud, commodities fraud, price manipulation, and spoofing.

Trunz pleaded guilty in the Eastern District of New York to one count of conspiracy to engage in spoofing and one count of spoofing in August 2019.

Both Edmonds and Trunz are still awaiting sentencing.

JP Morgan admits wire fraud

In September 2020, JPMorgan admitted to committing wire fraud in connection with: unlawful trading in the markets for precious metals futures contracts; and unlawful trading in the markets for U.S. Treasury futures contracts and in the secondary (cash) market for U.S. Treasury notes and bonds.

The company entered into a three-year deferred prosecution agreement through which it paid more than $920 million in a criminal monetary penalty, criminal disgorgement, and victim compensation, with parallel resolutions by the Commodity Futures Trading Commission and the Securities Exchange Commission announced on the same day.

Anyone who believes they may have been a victim in this case can visit the Fraud Section’s Victim Witness here.

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