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Two former JPMorgan traders sentenced to prison for fraud

FILE PHOTO: Signage is seen at the United States Department of Justice headquarters in Washington, D.C.

By Kanishka Singh

WASHINGTON (Reuters) -Two former precious metals traders at JPMorgan Chase were sentenced on Tuesday for engaging in fraud, attempted price manipulation and spoofing, the U.S. Justice Department said in a statement.

Gregg Smith, 59, of Scarsdale, New York, was sentenced to two years in prison and a $50,000 fine while Michael Nowak, 49, of Montclair, New Jersey, was sentenced to one year and one day in prison and a $35,000 fine, the Justice Department said.

They were part of a market manipulation scheme that spanned over eight years from 2008 to 2016, involved tens of thousands of unlawful trading sequences, and resulted in over $10 million in losses to market participants, according to the Justice Department.

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Spoofing involves placing and then quickly canceling orders to falsely create the impression of high demand or supply. It was outlawed in 2010 when the U.S. Congress passed the Dodd-Frank Act after the financial crisis.

Last year, Smith and Nowak were found guilty of fraud and other charges but acquitted of racketeering and conspiracy in a trial. Nowak was convicted on over a dozen charges including fraud, spoofing and attempted market manipulation, and Smith was convicted on 11 charges.

JPMorgan agreed in 2020 to pay more than $920 million and admitted to wrongdoing to settle with the Justice Department and the Commodity Futures Trading Commission over these and other traders' conduct.

(Reporting by Kanishka Singh in Washington; Editing by Andy Sullivan)