The former JPMorgan Chase managing director ran the bank’s precious metals business for more than a decade, making hundreds of millions of dollars in profit trading everything from silver to palladium. Now, he and two of his former colleagues face a federal jury in Chicago on criminal charges for thousands of so-called spoofing trades, which prosecutors say were used for years to generate illicit gains for JPMorgan and its top clients.
The trial, which was slated to kick off Thursday, threatens to lay bare the inner workings of the prestigious bank that has long dominated the market for gold. The government says Nowak’s business operated as a criminal enterprise, manipulating prices from 2008 to 2016 by placing thousands of trade orders that were never intended to be executed. If convicted, the three men are among the biggest players to face prison for price manipulation.
“These are big hitters,” said Robin Bhar, a former metals strategist at Societe Generale who spent more than three decades in the industry. “Coming to court gives it a lot more transparency in what is a very opaque market.”
The trial comes after years of a U.S. government crackdown on price manipulation that saw JPMorgan pay $920 million to settle spoofing claims two years ago. With $330 billion of notional value in precious metals derivative contracts at the end of March, the New York-based bank accounts for 67% of the positions put through U.S. banks. It holds three times as much as the next-biggest player, Citigroup, data shows.