Michael Nowak, the head of precious metals trading at JPMorgan has been charged by U.S. prosecutors with organising an eight-year long conspiracy to defraud customers and manipulate markets, according to the Financial Times.
The indictment alleges that Nowak along with two subordinates, Gregg Smith and Christopher Jordan, engaged in “widespread spoofing, market manipulation and fraud.” Specifically prosecutors stated that they purposefully placed orders only to cancel before execution to “create liquidity and drive prices toward orders they wanted to execute on the opposite side of the market.”
In what was described by assistant attorney-general Brian Benczkowski, as a “massive, multiyear scheme”, between 2008 and 2016, the traders allegedly placed ‘iceberg orders’, that concealed the size of an order and took advantage of algorithmic traders.
This is not the first time a JPMorgan trader has been investigated for wrongdoing. In 2018 trader Jonathan Edmonds pleaded guilty to charges of spoofing whilst only last month precious metals trader, Christian Trunz, plead guilty for the same crime.
The price of gold is currently at a six-year high, following fears of a global economic slowdown, U.S.-China trade tensions and the recent disruption in the oil market.
This latest scandal will increase scrutiny over the dominance of large banks such as JPMorgan and HSBC over the global precious metals markets.
Nowak is currently on leave, his employer has so far declined to comment.