Ex-JP Morgan Trader Pleads Guilty to Metals Spoofing, Wire Fraud

A former J.P. Morgan Chase trader charged with participating in a "spoofing" scheme to maximize profits on the precious metals market pled guilty in a US federal court on Tuesday.

From around 2009 through 2015, John Edmonds conspired with other gold, silver, platinum and palladium traders to place hundreds of buy or sell orders that he intended to cancel and not to execute at the time he placed the orders, a practice known as spoofing.

Edmonds, 36, who pleaded guilty to two counts of conspiracy to commit wire fraud, agreed to meet with investigators and has been cooperating against unnamed co-conspirators, court records show. He is scheduled to be sentenced on December 19.

The documents submitted to the court also paint a fairly concise picture of his overall tenure at the world's biggest investment bank, outlining his interaction and contact with more experienced members of his trading team. In particular, the documents cite his supervision and interaction with more senior traders at the bank, which resulted in him being taught how to spoof from J.P. Morgan’s veteran traders.

Rigging Precious Metals Futures

“For years, John Edmonds engaged in a sophisticated scheme to manipulate the market for precious metals futures contracts for his own gain by placing orders that were never intended to be executed,” said Assistant Attorney General Benczkowski.

Regulators and exchanges have stepped up their policing of spoofing in recent years, however, the people and firms they previously focused on were rather small-time avid gamers in markets. Earlier in January, regulators also ordered Citigroup to $25 million fine to settle charges it spoofed the Treasury futures market, the biggest spoofing Settlement Settlement Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Read this Term to date.

Spoofing, in general, is a practice in which a trader floods the market with fake orders by entering and quickly canceling large buy or sell orders on an Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term, to fool other traders into thinking the market is poised to rise or fall. Though the tactic has long been used by some traders, regulators began clamping down on the practice only a few years ago.