The criminal trial of three former JPMorgan Chase employees has started, with both prosecutors and defense lawyers making their opening statements.
The bank’s former global precious metals desk head Michael Nowak, precious metals trader Gregg Smith and salesperson Jeffrey Ruffo stand accused of racketeering and conspiracy, charges that are likely to result in substantial prison sentences for the three men if they are found guilty.
The charges relate to the banned trading tactic known as spoofing, where traders place fake sell or buy orders before canceling them, with the intention of manipulating prices. Prosecutors allege that the trio used the tactic to manipulate futures on various metals between 2008 and 2016.
In her opening statement, prosecutor Lucy Jennings told the jury that the men had willfully partaken in the scheme and that each had played a role in facilitating the fraud. Defense attorneys argued that the orders were genuine and no fraud had taken place.
Jonathan Cogan, representing Smith, said his client did not deny that some orders had been placed and subsequently canceled.
“But they are wrong about what was in his mind when he did it,” he said, insisting that his client had submitted all orders with the intention they would be fulfilled.
Nowak’s legal team made similar representations, with lawyers for both men insistent that the evidence the jury were going to see would not prove the case against their clients.
Lawyers for Ruffo insisted that he lacked the understanding to be involved in any plot as he was not a trader.
The trial is expected to last for five weeks, and prosecutors are expected to call three former traders to give evidence against their former colleagues, all of whom have previously pleaded guilty to related charges.
A fourth person has also been charged relating to the scheme. Christopher Jordan, who left his position as a trader at JPMorgan in 2009, will be tried separately following a request from his lawyers citing potential unfair treatment.