UPDATE: Federal Court Sentences Former J.P. Morgan Chase Traders to Prison

August 24, 2023

On August 22, 2023, Judge Edmond E. Chang sentenced two former precious metals traders at J.P. Morgan Chase for their role in a market manipulation scheme involving tens of thousands of unlawful trading sequences over an eight-year period, resulting in over $10 million in market losses.  The U.S. Department of Justice (DOJ) noted in its August 22, 2023, press release:

“Gregg Smith, 59, of Scarsdale, New York, was sentenced to two years in prison and a $50,000 fine. Michael Nowak, 49, of Montclair, New Jersey, was sentenced to one year and one day in prison and a $35,000 fine.”

In connection with its investigation and prosecution of the Defendants, the DOJ hired Monument Economics Group to analyze extensive CME Group precious metals market trading data.  The MEG Data Analytics team, led by Adrienne Sexton, assisted in identifying trading patterns, creating trial exhibits showing snapshots of the Defendants’ trading, assisting in the calculation of summary statistics presented at trial, supporting the DOJ trial team along with two of its witnesses, and assisting in the calculation of losses suffered by market participants.  Judge Chang referenced trial evidence that MEG assisted with in his August 21, 2023 Order concerning the loss-amount calculations related to the sentencing guidelines:

“[T]he evidence at trial demonstrated repeatedly, when the Defendants placed large, visible orders that created an imbalance with the opposite [side] of the market, frequently the price was pushed to the opposite side – thus filling the orders that the Defendants wanted to fill. The Defendants then cancelled (almost always successfully) the large-side orders. The jury found beyond a reasonable doubt (and the Court agrees with the finding) that the large-side orders were in reality placed with the unconditional intent to cancel them, because the Defendants entered the orders to trick the market into believing that there was a genuine supply or demand represented by the orders—that is, the spoof orders.”

Judge Chang further referenced the trial-evidence sequences MEG assisted with which showed the “super-fast-cancellation clicking that formed the core (and the most colorful part) of the trial evidence of Spoof Orders.”