JPMorgan dominates gold market as grand jury deliberates fraud fees

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(Kitco Information) – After a three-week trial, a jury continues to deliberate on probably the most vital courtroom case affecting the dear metals market in historical past.

Michael Novak, head of JPMorgan Chase’s valuable metals division, and gold dealer Greg Smith and Jeffrey Ruffo, an government specializing in hedge fund gross sales, are accused of manipulating and fixing gold and silver costs for eight years between 2008 and 2016.

Novak and Smith face fees of racketeering conspiracy, in addition to conspiracy to commit worth manipulation, wire fraud, commodity fraud and forgery; Ruffo was charged with racketeering and conspiracy. All three face years in jail if convicted.

“For years, executives at one of many world’s largest banks conspired to control the dear metals markets,” mentioned Matthew Sullivan, an legal professional on the U.S. Division of Justice, throughout his closing arguments Thursday. “All three had been working collectively in direction of the identical aim: making a revenue for the bullion workplace via counterfeiting.”

Nonetheless, the protection workforce argued of their closing arguments on Friday that Novak’s faux orders had been respectable and had been carried out about 25 p.c of the time, “making him the worst faker on the earth.”

David Meister, Novak’s protection legal professional, mentioned in his closing argument that state prosecutors relied on poor proof and questionable witnesses to assist their principle that Novak was a grasp fraudster.

“Mike is just not the prison mastermind of the federal government’s narrative,” Meister mentioned.

Fraud is a kind of manipulative buying and selling the place bids and affords are positioned available on the market and canceled earlier than they are often crammed. There’s by no means any intention to satisfy these orders. Trades are made to offer a false sense of measurement on one aspect of the market or the opposite.

With the jury now deliberating, the three-week trial offered a outstanding perception into the world’s largest gold bullion financial institution.

JPMorgan does not get away its income in its earnings filings; nonetheless, paperwork offered to the courtroom in the course of the trial confirmed how worthwhile the dear metals and commodity markets had been for the funding financial institution.

In accordance with Bloomberg, which lined the trial, JPMorgan made annual earnings associated to buying and selling within the valuable metals market between $109 million and $234 million yearly between 2008 and 2018. The financial institution additionally averaged $30 million a 12 months buying and selling and transporting bodily bullion.

The dear metals market continues to be a worthwhile place for the financial institution. In 2020, JPMorgan noticed document revenues of $1 billion buying and selling gold and silver. The dear metals market has seen unprecedented demand as the worldwide economic system grinds to a halt in the course of the COVID-19 pandemic.

The trial additionally confirmed that JPMorgan solely stands out within the valuable metals market as a result of it’s a key participant amongst a handful of bullion banks. It shops billions of {dollars} price of gold and silver in key markets like London, New York and Singapore. The financial institution

In accordance with the trial, in 2010, 40% of all gold transactions had been cleared by JPMorgan.

The trial additionally revealed how a lot the three merchants earned from buying and selling gold and silver. In accordance with courtroom filings, Novak, who ran the buying and selling desk, earned $23.7 million between 2008 and 2016. Smith earned $9.9 million over the eight-year interval. And Rufo earned $10.5 million.

As Bloomberg studies, some members of the jury “gasped” once they heard how a lot the three earned.

Disclaimer: The views expressed on this article are these of the writer and will not replicate the views of the writer Kitco Metals Inc. The writer has made each effort to make sure the accuracy of the data offered; nonetheless, neither did Kitco Metals Inc. nor can the writer assure such accuracy. This text is for informational functions solely. It’s not a solicitation of any change of commodities, securities or different monetary devices. Kitco Metals Inc. and the writer of this text don’t settle for duty for losses and/or damages arising from the usage of this publication.

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