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Precious Metals Market Rigger Turns State’s Evidence

John Edmonds, a former vice president at JPMorgan Chase bank, may be headed to prison for cheating clients and investors. But metals investors can hope it won’t be before he is done helping federal investigators catch even bigger fish.

JP Morgan

Edmonds pleaded guilty to spoofing precious metals markets “hundreds of times with the knowledge and consent of his immediate supervisors” last October.

The court delayed sentencing for those crimes again last week, and that is a very good sign.

The move to delay implies that Edmonds is still assisting the Department of Justice’s investigation of other bankers, both within JPMorgan and elsewhere. It is the second time sentencing has been postponed.

On the surface, it is starting to look like the case will be a slam dunk.

  • There is the guilty plea from Edmonds and his continued cooperation.
  • Deutsche Bank pleaded guilty to cheating markets in 2016 and turned over a trove of evidence, including hundreds of thousands of documents and recorded phone calls.
  • The CFTC caught Deutsche Bank, UBS, and HSBC “spoofing” prices in the precious metals markets and levied fines in January of this year.

Widespread and illegal price manipulation by the bullion banks is no longer a theory. It is a fact. Market watchers, such as Ted Butler and GATA, have been aggregating extensive evidence of price rigging for years.

Despite all that, metals investors should avoid counting any chickens before they hatch.

Many will recall the CFTC spent years looking for manipulation in the silver market. The investigation ended in 2015 without a single banker being held to account. The huge pile of evidence now available reveals just how much CFTC officials had to overlook.

Manipulation

No one should overestimate the competence of federal investigators or the willingness of senior government officials to prosecute powerful Wall Street bankers.

However, gold bugs can at least hope the Department of Justice is not completely captured. The cozy relationship between market regulators, including the CFTC, and Wall Street is infamous. There is less of a revolving door between the FBI and Wall Street.

The Justice Department’s criminal inquiry isn’t the only concern for the bullion banks. Investors are lining up to sue in civil court, based on the evidence uncovered in the ongoing crime investigations.

Those civil cases have been placed on hold by the court until May 31st. Prosecutors have asked the court to delay those cases to avoid interference. According to CNBC, the Department of Justice will soon request an extension of the stay on civil suits.

Plaintiffs are likely more than willing to delay, hoping to take full advantage of additional evidence unearthed in the criminal investigations.

If a number of traders, including senior executives in multiple banks, are convicted of repetitive cheating over several years, the civil liability could be enormous.


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