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The former head of the JPMorgan Chase & Co. precious-metals business and his top gold trader should get multiyear prison terms after they were convicted of spoofing the market for years, the US government said in a court filing.
Michael Nowak, who ran the precious-metals desk, should get five years, and Gregg Smith, the top trader, should get six years, prosecutors said Tuesday in a sentencing memo to the federal judge in Chicago who presided over their trial. The recommendation was for longer terms than traders at other banks convicted of spoofing.
The government said significant sentences are warranted because the two had spoofed for years and knew what they were doing was prohibited. At trial, prosecutors presented evidence that included detailed trading records, chat logs and testimony by former co-workers who “pulled back the curtain” on how Nowak and Smith moved precious-metals prices up and down for profit from 2008 to 2016.
Both men “abused their senior positions on the desk to normalize their market manipulation and indoctrinate younger traders,” prosecutors said. Nowak coached one young trader “to lie to JPMorgan’s Compliance Department after” he’d been flagged for spoofing, and Nowak later pressured him “not to plead guilty and cooperate with the government’s investigation,” the government said.
Attorneys for Nowak and Smith couldn’t be immediately reached for comment. Sentencing memos from the defense teams are due next month.
The defendants are scheduled to be sentenced in early June.
In earlier spoofing cases, two former precious-metals traders from Deutsche Bank AG got one-year sentences in 2021, as did two former traders at Bank of America Corp.’s Merrill Lynch unit earlier this month.
The case is US v. Smith et al, 19-cr-00669, US District Court, Northern District of Illinois (Chicago).
(By Steve Stroth, with assistance from Joe Deaux)
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