JPMorgan To Pay Record $1 Billion Settlement Over Precious Metals, Treasury Manipulation

Last week, we reported that as Deutsche Bank's infamous gold manipulator and spoofer - and currently star witness for the prosecution in a massive case targinet precious metal manipulation - David Liew, admitted "spoofing was so commonplace I figured it was ok." Well, it wasn't ok, but since everyone else was doing it, we can see why Liew was confused.

And speaking of everyone else also manipulating and spoofing gold, we go from Deutsche Bank straight to JPMorgan, which according to Bloomberg is set to pay a record $1 billion settlement to resolve market manipulation investigations by U.S. authorities into its trading of metals futures and Treasury securities.

A penalty approaching $1 billion would far exceed previous spoofing-related fines. It would also be on par with sanctions in many prior manipulation cases, including some brought several years ago against banks for allegedly rigging benchmark interest rates and foreign exchange markets.

The settlement amount, the highest in history of its kind, may be announced as soon as this week said anonymous Bloomberg sources. Its payment would also end probes by the DOJ, CFTC and SEC into whether traders on JPMorgan’s precious metals and treasuries desks rigged markets. Which, of course, they did.  In fact, a cynical take would suggest that JPM is merely paying a kickback to the various regulators for the mistake of having been caught rigging various markets.

And since JPM is about to pay a small fraction of the profits it made from manipulating gold and rates markets, said rigging and manipulation with tremendous IRR will resume shortly, only this time JPM's traders will be far more careful not to get caught, which in retrospect was their only crime.

According to the report, it's unclear if the largest US commercial bank will face additional DOJ penalties in court:

Previous spoofing cases have been resolved without banks or trading firms pleading guilty to criminal charges. However, when prosecutors filed cases last year against individual JPMorgan traders they painted a grave picture of its precious metals desk, saying it operated as an illicit enterprise within the bank for almost a decade.

What we do know is that once JPM pays the fee - which it may well have funded from one of the numerous bank bailout schemes unleashed by the Fed in recent months - the government’s settlement with JPMorgan is not expected to result in any restrictions on its business practices.

And in what will come as a shock to many, unlike most settlements which are resolved with the guilty party neither admitting nor denying guilt, in this case it is anticipated that JPMorgan will admit to wrongdoing. Just wonderful: the bank made billions rigging rates and gold, and as punishment ends up paying a small portion of the profits and admitting what it did was wrong.

Surely that will teach it a lesson.

And just so we are clear on why Jamie Dimon is "richer than you", in 2015 JPMorgan pled guilty to massive currency manipulation, paying a $550 million fine to the Justice Department. The bank also paid penalties to U.S. regulators.

It can now add treasurys and precious metals manipulation.

The record JPMorgan settlement follows criminal charges filed last year against several of its employees, including former head of the precious metals desk, Michael Nowak, when the DOJ used racketeering laws more commonly used in mafia and drug gang prosecutions, alleging the precious metals desk effectively became a criminal enterprise for eight years.

Nowak and three others accused in the case pleaded not guilty and are seeking to have the charges dismissed. Two other former traders have pleaded guilty to conspiracy claims and are cooperating. Shortly after Nowak was charged, JPMorgan learned it was the focus of a separate but related criminal investigation into the bank’s trading of Treasury securities and futures, according to another person familiar with the matter. JPMorgan, which disclosed that investigation earlier this year, said it’s cooperating with authorities.

So much for that RICO case: JPM pays $1 billion and all is forgiven.

Meanwhile, for anyone who still cares, one month ago we published a list of 8 unanswered questions directed at JPM gold spoofer John Edmonds. While we doubt anyone at the DOJ or SEC will care, we republish them below:

  1. How long can it possibly take for John Edmonds to divulge everything he knows?
  2. Has Jamie Demon, JP Morgan CEO, or former head of JP Morgan Commodities Group Blythe Masters, been questioned about their possible roles in the gold spoofing operation of their bank?
  3. Given that the feds have gone after JP Morgan bankers under the RICO act, this implies that JP Morgan was running a systemically criminal gold spoofing operation that, by nature, would imply the involvement of much higher level JP Morgan executives in this scheme than even the head of their Metals Trading desk.
  4. What is the identity of these higher level JP Morgan executives, if true? At least two of the interrogated and arrested JP Morgan has admitted that the gold price manipulation scheme went very high up the corporate hierarchy at JP Morgan.
  5. What is Mr. Edmonds response to this drawn out inquisition? Does he feel like he is possibly being set-up to be “Epsteined” to keep knowledge of this criminal scheme at the highest echelons of JP Morgan from coming to light?
  6. Since Edmonds’s arrest, the feds have charged at least four more JP Morgan bankers, Michael Nowak, Gregg Smith, and Christopher Jordan with racketeering charges under the federal RICO act normally reserved for prosecuting low-life gangsters, drug dealers, and mafia members. For example, the US Justice Department invoked the RICO act in 1984 to convict Florida Deputy Police Chief Raymond Cassamayor for running a cocaine smuggling operation and in 1992, to convict John Gotti and Frank Locascio of the infamous Gambino crime family. Both Christopher Jordan and Michael Nowak could face up to 30-years in prison if convicted.  JP Morgan Metals Desk Executive Director Jeffrey Ruffo was charged in December 2019. John Edmonds was originally reported upon his arrest in 2018 as facing the same prison time. Has his squealing resulted in the arrest of his three colleagues mentioned above and if so, has he gained a significant reduction in prison time for his cooperation?
  7. JP Morgan banker have testified that they learned how to effectively spoof gold prices lower in futures markets from Bear Stearns, which makes absolute sense, since Bear Stearns bankers, for decades, were alleged to have been at the head of the class in artificially manufacturing waterfall like type price declines in silver futures markets. It was no surprise, that after the 2008 financial collapse of Bear Stearns, JP Morgan agreed to step in and keep the silver price manipulation scheme going with the assumption of Bear Stearn’s massive short positions in the silver futures markets. Since John Edmonds was arrested, the US Justice Department has brought cases against 16 more bankers employed by Deutsche Bank and United Bank of Switzerland. Is this a result, again, of John Edmonds’s cooperation with the Feds?
  8. With the Feds bringing cases against bankers from many different global banking institutions for gold and silver price manipulation, what is their end goal in this RICO sting operation? Is it all a smoke and mirrors game executed to deceive the public into thinking justice, for the first time in decades, will actually be enforced? Will bankers actually receive the long prison sentences they deserve, or will all strike a deal and be slapped only with fines that amount to a fraction of the billions they stole from investors through their executed price suppression scheme in the gold and silver futures markets and will they all walk?