A federal jury in Chicago today (August 10) found Michael Nowak, the former head of JPMorgan Chase’s precious metals trading desk, and his top trader guilty of wire fraud and spoofing, a deceptive trading practice at the center of a multiyear anti-fraud campaign led by the Justice Department, The Wall Street Journal first reported.
Spoofing is a form of market manipulation in which a trader places one or more highly-visible orders in the futures market but has no intention of keeping them. The bogus order acts to drive up the commodity’s price, which the trader can then take advantage of. The act was outlawed in 2010 but remained widespread at some Wall Street banks, prosecutors say.
Nowak and his trader, Gregg Smith, were charged with manipulating gold prices while a sales executive who worked with them, Jeffrey Ruffo, was acquitted.