A Crack in the Dike?
by Ted Butler  /  November 8, 2018

“Tuesday’s announcement by the Department of Justice of a guilty plea by a former trader of JPMorgan for systemic “spoofing” and price manipulation of gold, silver, platinum and palladium traded on the COMEX and NYMEX futures exchanges (owned by the CME Group) sure seemed like a very big deal to me for a number of reasons.

The infractions occurred from 2009 to 2015 and the trader admitted to engaging in a conspiracy to commit market manipulation on hundreds of occasions, with the knowledge and consent of his immediate supervisors. Please take the time to read this, as it is remarkably plainspoken.

First, let me get some personal feelings out of the way. I’ve received a number of comments to the effect of how this vindicates my long held belief that JPMorgan is the silver (and gold) crook of crooks. The truth is that I don’t consider it vindication (yet), but I will confess to a feeling of relief upon reading the complaint, as I believe it greatly reduces the chances of JPMorgan suing me for openly calling them the crooks that they are. To be sure, my fear of being sued was never really a personal fear, but how it might affect my wife and family. Correctly or incorrectly, I feel a great burden has been lifted.

That aside, the announcement by the DOJ was remarkable in many ways, not the least of which is that this is a criminal case which involves jail time and not a civil case which only involves monetary fines. Also, the announcement makes clear that this is very much an ongoing investigation and it’s hard to see how there won’t be further fall out for JPMorgan, since it’s obvious the guilty trader was doing what others were doing at the bank. It’s also hard for me to see how a trader involved in systemic criminal market activity in coordination with other traders at the bank doesn’t equate to systemic criminal activity by the bank itself. Notable, of course, is that of all the blizzard of spoofing and short term price manipulation cases brought recently in silver and gold, this is the first to zero in on traders at JPMorgan.

“It seems that Bart Chilton, whose tenure as a commissioner at the CFTC ended in early 2014, has chosen to speak out on the silver manipulation and his and the agency’s role at the time. This is the very first time that an insider has confirmed virtually everything I’ve alleged about JPMorgan.”

I am struck by the DOJ’s announcement not mentioning the CFTC, although I may be reading too much into that. Interestingly, the guilty plea covers the time the CFTC had a supposed formal investigation in place into a silver market manipulation as a result of the concentrated short position of JPMorgan revealed in the August 2008 Bank Participation Report; a five year investigation that went nowhere.

There’s no question in my mind that the CFTC handles JPMorgan with kid gloves as a result of some type of free get out of jail card emanating from the Bear Stearns takeover of March 2008. The DOJ, much to its credit, doesn’t appear to be part of any such arrangement. That’s not to say that the CFTC won’t be involved as the DOJ pursues this case, just that it’s odd at this point that this is an exclusive DOJ production.

Spoofing is the blatantly manipulative practice of entering large orders and immediately cancelling those orders with the sole intent of artificially moving prices. As far as market crimes go, spoofing is obvious and lacking in any possible redeeming features, much like the mugging of old ladies. It’s a testament to the CFTC’s and CME Group’s complete regulatory ineptitude that spoofing has existed for as long as it has. With that in mind, let me point out what the DOJ’s guilty criminal plea doesn’t involve.

As much as the guilty plea points the finger at JPMorgan’s inherent corruption in its precious metals dealings, unfortunately, it only scratchers the surface. Spoofing and other short term illegal trading tricks are only tools used to enable the real price manipulation that is occurring in full view. The real manipulation is the ongoing fraud of prices being set by paper positioning on the COMEX and elsewhere between the nitwit managed money traders and the corrupt commercials, led by JPMorgan. It is nothing short of infuriating that the regulators – and I include the Department of Justice here – can’t or won’t see that spoofing, as bad as it is, is only an enabling tool to a much larger crime.

Spoofing does artificially move prices in the very short term and should have been banned outright many years ago; but to stop at spoofing is to miss the real crime. Spoofing isn’t responsible for the long term suppression of prices that has absolutely devastated precious metal investors and mining companies. But spoofing has been an integral tool in inducing the managed money technical fund traders to buy and sell because it gives the commercials the ability to rig prices up or down through the moving averages that dictate the technical funds’ behavior. That’s evident in the observation that the vast majority of spoofing cases involve traders for the banks. As dumb as I believe the technical funds may be, they’re not dumb enough to spoof and set off phony moving average penetrations to induce themselves into buying or selling.

The ability to spoof prices through moving averages and get the technical funds to buy and sell on command is a key ingredient by which JPMorgan has never suffered a loss in trading COMEX silver and gold. I think I know why the CFTC won’t touch this, but I believe that the only reason for the Justice Department not seeing it is because they don’t know enough to look at it. Similarly, I don’t believe that the DOJ knows that JPMorgan has accumulated massive amounts of physical silver and gold. (I will try to inform them again).

The real manipulation involves the crooks at JPMorgan acquiring 800 million ounces of physical silver and 20 million ounces of physical gold at prices made artificially low by JPMorgan maneuvering the managed money traders into and out from positions on the COMEX. Yes, JPMorgan used spoofing as indicated in the plea deal to accomplish the maneuvering, but to leave it at spoofing is a gross miscarriage of justice. It’s like the police pulling over a serial killer and letting him go after citing him for a few traffic violations.

All it would take for the DOJ to see the real market manipulation is to step back a bit and consider things in a slightly different perspective. Yes, by all means continue to go after the spoofers, but try to consider that spoofing is only a tool that enables a much deeper price manipulation run by JPMorgan. As much as I am trying to not to get my hopes up that the DOJ might stumble upon the real crime in silver and gold, I do confess to sensing a slight crack in the dike. Coupled with other things, like JPMorgan having now accumulated more physical silver and gold than I could ever have imagined a few short years ago and the incredible physical movement in and out of the COMEX-approved silver warehouses, it’s hard for me to see how there won’t be a resolution of the ongoing price manipulation in the immediate future.”

The Seriousness of the Latest Silver Scandal
by Ted Butler / November 26, 2018

“A few follow up comments about the still rather remarkable announcement by the Department of Justice concerning the guilty plea by the former JPMorgan trader for spoofing in precious metals. Contained in the announcement was the statement that the guilty plea was accepted and sealed on Oct 9, nearly a month before it was unsealed on Nov 6. With a rather short sentencing date approaching on Dec 19, and the time it took to unseal the plea, it may be assumed that the trader has already fully cooperated in the hopes of reducing his jail time, said to approach 30 years with no cooperation.

The thought of facing serious jail time for someone that never thought such an outcome was possible for everyday practices known to supervisors and other traders at the bank had to come as a shock. For years, the trader was riding high, a master of the trading universe in a highly respected position, now suddenly facing incarceration. Companion reporting suggested that JPMorgan itself was unaware of the guilty plea, according to a person with knowledge of the matter. It was not indicated if the CFTC was closely involved. Since the former trader left JPMorgan last year, it’s not hard to imagine how his cooperation with the DOJ could remain unknown to the bank. No one in the silver market is as crooked as JPMorgan and the announcement by the Department of Justice of a guilty plea by one of its former traders is the first solid connection between my allegations of the past ten years about JPMorgan and a finding of wrongdoing by a trader for the bank in COMEX silver and gold. This goes a very long way towards vindicating my narrative of the past ten years.

It’s been reported by Bloomberg that the Justice Department asked a judge overseeing a civil antitrust case against JPMorgan to postpone the case for six months “to protect the integrity” of its ongoing criminal probe. This indicates that the Justice Department is serious about pursing the matter of a silver price manipulation and JPMorgan’s involvement. Inside the bank, this must come as a bombshell. Further indictments appear inevitable. If the media gets wind of the full story it could turn into a momentous scandal reaching to the top. A lot of people at JPMorgan must now be sweating bullets. What they have been doing for years is clearly illegal. Nobody can get by using tactics like spoofing to suppress the price of a commodity in the futures market while loading up on the physical asset itself. How could they be so myopic as to pull of this gross manipulation in silver for almost eight years without fear of consequences? They have 150 million ounces of their silver hoard in their COMEX warehouse which is more physical silver than the Hunt Brothers acquired in the 1980 silver scandal. To repeat, JPM acquired that silver and much more by suppressing the price in the futures market and scooping up physical silver at prices they manipulated lower. That’s a far more serious crime than spoofing. Another major crime in silver (and gold) committed by JPM is that it has never taken a loss in more than a decade when adding to COMEX short positions.

The maintenance of a perfect trading record over a decade in something as hazardous as shorting silver is as impossible as a lifetime batting average of 1,000. Only if the game were seriously rigged could such a feat occur. I could provide the DOJ with a paint-by-the-numbers illustrated playbook documenting JPM’s impossibly perfect trading record if they should request it. One thing is certain, upper management at JPMorgan can’t plead ignorance of what their underlings have pulled off in silver. I have sent my accusations and proof of wrongdoing to the board of directors, the senior management and their legal counsel time and again over the past eight years. In addition, I have sent 1,000 similar emails and letters to the Commodity Futures Trading Commission and the CME group (COMEX). It seems to me that if JPM could have answered and easily explained away the allegations, they would have done so long ago. The fact that JPMorgan has essentially eliminated their manipulative short position in the past week may mean they are turning over a new leaf. That has profound implications for the silver market.”

JP Morgan faces class action lawsuit after guilty pleas by a former metals trader
by Dawn Giel / 13 Dec 2018

“Traders from across the U.S. are banding together to accuse J. P. Morgan Chase of manipulating precious metals markets for years. At least six lawsuits, all making similar allegations against the nation’s largest bank, have been filed in New York federal court in the past month, since federal prosecutors in Connecticut unveiled a plea agreement with a former J. P. Morgan Chase metals trader. The cases could potentially include thousands of people who traded in the precious metals market. The White Plains, N.Y., law firm Lowey Dannenberg is asking the court to combine the cases and name it as the lead. The law firm’s commodities group is led by Vincent Briganti, the attorney who filed the first lawsuit on behalf of Dominick Cognata, a New York resident who alleges he suffered losses due to J. P. Morgan’s trading conduct in the silver and gold futures and options markets. A combined case, seeking class action status, would include anyone who purchased or sold futures contracts or an option on NYMEX platinum or palladium or COMEX silver or gold between at least Jan. 1, 2009, and Dec. 31, 2015. The lawyers believe that “at least hundreds, if not thousands” of traders would be eligible to join the case.

Named as defendants in all of the lawsuits are John Edmonds, a 36-year old former metals trader at J. P. Morgan, a group of yet-to-be-identified precious metals traders and the bank. Edmonds, a New York resident, pleaded guilty in October to one count of conspiracy to defraud the market and manipulate prices of precious metals futures contracts and one count of commodities fraud. In the criminal plea, Edmonds admitted that he and other “unnamed co-conspirators” at J. P. Morgan, fraudulently manipulated precious metals markets from 2009 to 2015, the same time frame covered in the class action suits. Briganti filed the initial class action on Nov. 7, just one day after the Justice Department unsealed Edmonds’ plea in the U.S. District Court of Connecticut. Edmonds admitted in his guilty plea that he deployed the illegal trading scheme hundreds of times with the direct knowledge and consent of his immediate supervisors.

Plaintiffs say they have suffered economic injury, including monetary losses, as a direct result of actions by Edmonds and the other unnamed J. P. Morgan metals traders in the futures and options contracts. One of the suits alleges that “the number of unlawful trades that JP Morgan traders executed in precious metals futures markets is at least in the thousands.” J. P. Morgan declined to comment. Lowey Dannenberg did not respond to a request for comment by CNBC. The Justice Department’s criminal investigation is still ongoing and recently caused a separate related civil case to be put on hold for at least six months while the government continues its investigation.

That civil lawsuit, which also accuses J. P. Morgan of rigging the precious metals market, was filed in 2015 by hedge fund manager Daniel Shak and two commodity traders. After reviewing the details of the plea agreement, David Kovel, the attorney for Shak’s suit, sought to re-interview Edmonds, along with two other current and former senior traders at the bank. However, the government argued that reopening questioning would be detrimental to the ongoing criminal investigation. The federal judge overseeing the proceedings ordered a six-month stay in the civil case. Kovel declined to comment. Edmonds was originally scheduled to be sentenced in Hartford, Conn., on Wednesday, Dec. 19, but a court filing on Nov. 27 shows the sentencing has been postponed until June. A spokesman for the U.S. Attorney for Connecticut could not elaborate on why the sentencing was postponed since the court filing is under seal.”




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