(Reuters) – Three former JPMorgan Chase & Co employees are facing a federal lawsuit in Chicago on Friday over allegations that they helped turn their trading counter into a criminal company that falsified futures orders for precious metals to manipulate prices.
The bank’s former global head of precious metals Michael Nowak, precious metals trader Gregg Smith and salesman Jeffrey Ruffo are accused of extortion and conspiracy in the US Department of Justice’s most aggressive case to date, focusing on manipulative trading tactics called spoofing.
The tactic involves placing and then quickly canceling buy or sell orders in order to incorrectly create the impression of high demand or supply. The three men are accused of using the tactics to manipulate futures on metals such as gold, silver, platinum and palladium between 2008 and 201
6.The defendants’ lawyers did not respond to a request for comment on Thursday.
Spoofing was banned in 2010 when Congress passed the Dodd-Frank Act following the financial crisis. Since then, prosecutors have claimed that previous cases constituted fraud.
In addition to blackmail and conspiracy, Nowak faces 13 other charges including fraud, spoofing and attempted market manipulation, and Mr. Smith faces 11 more charges.
Christopher Jordan, a trader who left JPMorgan in 2009, has also been charged and will be tried separately.
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