Mali frees Resolute executives after $160 million deal, AFP reports
The three executives, including CEO Terry Holohan, were freed from detention on Wednesday.
JPMorgan Chase & Co.’s former chief gold trader was ordered to spend two years in prison for spoofing, fraud and attempted market manipulation, the stiffest sentence handed down yet in a recent government crackdown on questionable trading practices.
Gregg Smith was sentenced Tuesday in Chicago by US District Judge Edmond Chang. Smith, who was convicted last year along with Michael Nowak, the bank’s precious-metals desk head, was described by an assistant US attorney as “the most prolific spoofer that the government has prosecuted to date.”
The judge said Smith and Nowak clearly knew what they were doing was wrong.
“You told many lies to the market,” Chang said. “For many years, you injected fraud into the market.” He ordered Smith to start his sentence on Jan. 15.
Smith’s lawyer said he’s appealing his conviction. Nowak is expected to be sentenced later on Tuesday.
Prosecutors had initially sought a sentence of six years for Smith, but on Tuesday said it was revising its recommendation to 23 months. The defense argued Smith should be spared prison.
Read More: Ex-JPMorgan gold trader found guilty in spoofing trial
The JPMorgan case is 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.
Convictions for Smith, Nowak and a third trader who was found guilty in November, Christopher Jordan, capped a string of wins by prosecutors in spoofing cases targeting some of Wall Street’s biggest banks, including Bank of America Corp., Deutsche Bank AG and Morgan Stanley. Two former Deutsche Bank and two former Bank of America traders previously each received one-year sentences.
JPMorgan, the largest US bank, agreed in 2020 to pay $920 million to settle the Justice Department’s allegations against it — by far the biggest fine by any financial institution accused of market manipulation since the 2008 global financial crisis.
Christiaan Trunz, a former Smith protege who pleaded guilty to spoofing and cooperated with prosecutors, testified during the trial in July 2022 that Smith was so fast at placing and canceling bogus orders that his colleagues would joke that he needed to put ice on his fingers to cool them down.
Read More: JPMorgan gold trader says boss coached him on spoofing lie
“This was an open strategy on the desk,” said Trunz, who sat next to Smith and watched him click his computer mouse rapidly to place and cancel trades. “It wasn’t hidden.”
Spoofing was common in the commodity world, where traders would place a buy or sell offer they never intended to executive — hoping to manipulate prices in the direction they wanted to make a profit. The practice became illegal after passage of the 2010 Dodd-Frank Act, which included several banking and market reforms in the wake of the financial crisis.
Defense attorneys argued in an April court filing that Smith and Nowak should be spared prison, saying neither gained anything personally from the actions. During trial, Smith’s lawyer said his client’s orders were legitimate, and that there were other explanations to buy and sell precious metals contracts at the same time on behalf of customers.
The case is US v. Smith et al, 19-cr-00669, US District Court, Northern District of Illinois (Chicago).
(By Steve Stroth and Joe Deaux)
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