The Justice Department is conducting multiple criminal investigations into big banks with the cooperation of traders who have pleaded guilty to spoofing-related crimes.
In the past five years, federal prosecutors have brought a total of 13 spoofing cases against 19 defendants.
“We are continuing to follow the facts wherever they lead,” Benczkowski said. Adding that the indictments today are not the end of the Justice Department’s investigation into J.P. Morgan.
Regulator brings civil charges against Nowak and Smith
In a related civil enforcement action, the Commodity Futures Trading Commission also announced charges against Nowak and Smith for spoofing, engaging in a manipulative and deceptive scheme, and attempting to manipulate prices in the precious metals futures market.
According to the complaint, Nowak, who supervised Smith and others on J.P. Morgan’s precious metals desk, placed thousands of spoof orders in the precious metals futures markets and was also aware that Smith, along with other traders were spoofing.
Smith, who prosecutors also say placed thousands of spoof orders, also taught other traders at J.P. Morgan and Bear Stearns how to spoof, the complaint alleges.
This case was brought in connection with the CFTC Division of Enforcement’s Spoofing Task Force and seeks, among other relief, civil monetary penalties, disgorgement, restitution, trading bans and a permanent injunction against future violations of the federal commodities law.
“I don’t think that one should look at the charges today as the end of the investigation, ” CFTC Director of Enforcement James McDonald said.
The CFTC also announced on Monday it settled charges against former J.P. Morgan precious metals trader Christian Trunz.
The order finds that Trunz and others at the banks placed futures orders they intended to cancel before execution, to induce other market participants to trade against the orders Trunz and others at the banks wanted filled.
The order also finds that Trunz learned the trading strategy of spoofing from more senior traders at the banks and deployed this strategy with the knowledge and consent of his immediate supervisors. As part of his settlement, Trunz has agreed to serve as a cooperating witness in the ongoing investigation.