A former precious metals trader at a United States bank
(Bank) pleaded guilty in a proceeding unsealed yesterday to commodities fraud
and a spoofing conspiracy in connection with his participation in fraudulent
and deceptive trading activity in the precious metals futures contracts
markets.
Assistant Attorney General Brian A. Benczkowski of the
Justice Department’s Criminal Division, U.S. Attorney John H. Durham of the
District of Connecticut and Assistant Director in Charge William F. Sweeney Jr.
of the FBI’s New York Field Office made the announcement.
John Edmonds, 36, of Brooklyn, New York, pleaded guilty
under seal on Oct. 9 in the District of Connecticut to an information charging
him with one count of commodities fraud and one count of conspiracy to commit
wire fraud, commodities fraud, commodities price manipulation and
spoofing. Sentencing is scheduled for
Dec. 19 before U.S. District Judge Robert N. Chatigny of the District of
Connecticut.
“For years, John Edmonds engaged in a sophisticated scheme
to manipulate the market for precious metals futures contracts for his own gain
by placing orders that were never intended to be executed,” said Assistant
Attorney General Benczkowski. “The
Criminal Division is committed to prosecuting those who undermine the investing
public’s trust in the integrity of our commodities markets through spoofing or
any other illegal conduct.”
“This defendant was involved in manipulating the precious
metals commodity markets for several years, and I thank the FBI for its
diligent investigation of this matter and its commitment to hold accountable
those who use technology to their advantage to cheat these markets.” said U.S.
Attorney Durham. “The investigation of
deceptive trading practices by others involved in this scheme is ongoing.”
"With his guilty plea, Edmonds admitted he intended to
introduce materially false and misleading information into the commodities
markets,” said FBI Assistant Director in Charge Sweeney. “By conspiring with
his trading partners to place spoof orders, he blatantly attempted to profit
off of an unfair market that he helped create.
The FBI will continue to work with our partners to insure financial
markets remain a level playing field for all investors."
As part of his plea, Edmonds admitted that from
approximately 2009 through 2015, he conspired with other precious metals
traders at the Bank to manipulate the markets for gold, silver, platinum and
palladium futures contracts traded on the New York Mercantile Exchange Inc.
(NYMEX) and Commodity Exchange Inc. (COMEX), which are commodities exchanges
operated by CME Group Inc. Edmonds and
his fellow precious metals traders at the Bank routinely placed orders for
precious metals futures contracts with the intent to cancel those orders before
execution (the Spoof Orders), he admitted.
This trading strategy was admittedly intended to inject materially false
and misleading liquidity and price information into the precious metals futures
contracts markets by placing the Spoof Orders in order to deceive other market
participants about the existence of supply and demand. The Spoof Orders were designed to
artificially move the price of precious metals futures contracts in a direction
that was favorable to Edmonds and his co-conspirators at the Bank, to the
detriment of other market participants.
In pleading guilty, Edmonds admitted that he learned this deceptive
trading strategy from more senior traders at the Bank, and he personally
deployed this strategy hundreds of times with the knowledge and consent of his
immediate supervisors.
This case is the result of an ongoing investigation by the
FBI’s New York Field Office. Trial
Attorney Matthew F. Sullivan of the Criminal Division’s Fraud Section and
Assistant U.S. Attorney Avi M. Perry of the District of Connecticut are
prosecuting the case.
Individuals who believe that they may be a victim in these
cases should visit the Fraud Section’s Victim Witness website for more
information.
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