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Will DOJ Finally Hold Bullion Banks Accountable for Market Rigging?

It is hard to cheer for the Department of Justice these days, but federal prosecutions have begun to offer hope for precious metals investors hurt by rigged markets and crooked traders.

JP Morgan

The DOJ looks poised to do what regulators at the CFTC have not. They will use evidence of blatant cheating and fraud to hold a few bankers accountable.

Last week, DOJ officials asked the judge in a civil suit against JPMorgan Chase to delay proceedings for 6 months to clear the path for more prosecutions.

Plaintiffs in that civil action have accused JPMorgan of ripping off investors based in part on evidence turned over by Deutsche Bank in 2016.

Deutsche Bank paid millions of dollars in fines and provided hundreds of thousands of documents plus dozens of voice recordings to settle its portion of the ongoing lawsuit.

Justice Department investigators, who may be using the same trove of information, would like to see a pause in the civil proceedings to “protect the integrity” of their ongoing criminal investigation.

Trader Has Turned State’s Evidence against JPMorgan, Others

DOJ's request follows a key conviction last month. John Edmonds, a former JPMorgan metals trader, pleaded guilty to spoofing the metals markets and admitted he had done so with full awareness and support of his managers.

Edmonds, like Deutsche Bank, has agreed to cooperate and provide evidence implicating his superiors and other traders, both inside his bank and elsewhere.

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Edmonds admitted to spoofing markets hundreds of times over 6 years, confirming what many gold and silver bugs have long known.

The precious metals markets are illegally manipulated by the bullion banks as a matter of routine and they have been doing it for a very long time.

Yes, the debate over whether or not there is price rigging in the metals markets is effectively over.

Now the debate over whether these rigged markets can be cleaned up begins. Edmonds will be sentenced for his crimes on Dec. 19th. The DOJ’s request for a 6-month delay of the civil suit implies that the agency expects to make real progress between now and the middle of next year.

If the Justice Department can uncover even more evidence of fraud, charge multiple people with crimes, and implicate several other banks, it will be a tremendous boost to the case.

CFTC Continues to Turn a Blind Eye


Unfortunately, despite progress elsewhere, the captured CFTC has yet to acknowledge the complete failure of its own 5-year investigation of the crooked silver market. While they “searched” in futility for wrong-doing, Edmonds and an unknown number of other bank traders cheated incessantly.

As of this writing, there is no indication the CFTC plans to take action of any sort – they apparently don’t find the guilty pleas and mountains of evidence compelling enough to reopen their own investigation.

It’s too bad because regulators could do a lot to restore confidence in the markets by restricting the banks’ ability to trade – something the DOJ cannot do.

The banks are still getting their money’s worth for capturing the CFTC and other regulatory bodies. Bank executives may wish they had invested more in cozying up with the FBI and federal prosecutors.

Now it appears criminal and civil juries will get their chance to evaluate what the bullion banks have been doing. Those citizens may not be as tolerant as the bureaucrats at the CFTC.

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