The Scam That Ran for Years on the Trading Floor

The Facts Gregg Smith was an executive director at JPMorgan. Michael Nowak was a managing director who ran the entire precious metals trading desk, splitting time between New York and London. Christopher Jordan traded precious metals at JPMorgan from 2006 to 2009, then moved to Credit Suisse. These were not rogue temps or mid-level workers — these were the bosses.

The Misconduct The scheme they ran is called spoofing. A trader places a massive fake order to buy or sell — big enough to shift the whole market’s perception of supply and demand. Other traders see the order, believe demand is real, and adjust their behavior. The moment the market moves in the spoofer’s favor and their real trade executes at the better price, they cancel the fake order. The market was tricked. Money changed hands based on a lie. Repeat, every single day.

Trading on the CME’s Globex platform is anonymous. The system shows all visible orders and assumes every single one represents a genuine intention to trade. Smith, Nowak, and Jordan exploited that assumption as a feature, not a bug. They used it to weaponize the market’s own transparency against everyone else in it.

The Numbers Don’t Lie: A Fill Ratio That Exposes Everything

The Facts Finance expert Kumar Venkataraman analyzed 100 trading episodes and found that Smith’s spoof orders had a fill ratio — meaning the percentage of contracts actually executed — of just 0.18%. His genuine orders? 79.11%. Nowak’s numbers were nearly identical: 0.22% on spoof orders, 90.11% on real ones. These numbers mean that out of every 1,000 fake orders placed, fewer than 2 were ever filled. That is not a trading strategy. That is a deception machine.

Venkataraman testified that there was no “economically rational” reason for this pattern if they actually intended to trade those orders. The only explanation that fits the data is the one the jury accepted: the orders were designed from the start to be canceled, every time, after doing their damage to the market price.

The JPMorgan Spoofing Academy: A Mentorship in Fraud

Your Boss Didn’t Just Tolerate It. He Taught It.

The Misconduct John Edmonds sat physically next to Smith and Nowak at JPMorgan’s New York office. He testified under oath that he witnessed them spoof “regularly, at least several times per day.” He did not stumble into the scheme on his own. Smith and Nowak taught him how to spoof. This was on-the-job training for financial crime, delivered by senior management, at one of the most powerful banks in the world.

Christian Trunz described Smith directly as his mentor. He worked “side by side” with Smith and testified that he watched Smith spoof “all the time.” Trunz sent a chat to a JPMorgan salesperson confirming that Smith was actively manipulating futures prices while they worked together. Another cooperating witness, Corey Flaum, sat alongside Smith at Bear Stearns before JPMorgan acquired it in 2008. Flaum testified that Smith’s trading patterns were “carbon copies” of his own confirmed spoofing behavior.

Three separate cooperating witnesses. Three separate vantage points. One consistent picture: Smith and Nowak ran a floor-wide spoofing operation and trained the people sitting next to them to do the same thing. When compliance officers finally walked in and warned the traders that regulators were looking into spoofing, the warning did not produce remorse. It produced a plan to cover tracks.

The Compliance Meeting That Changed Nothing

The Misconduct After JPMorgan compliance officials warned traders to stop spoofing because regulators were investigating, Nowak pulled Trunz aside to coach him ahead of the compliance review. His instruction, quoted directly in court: “Remember, every order we placed, we intended to trade.” That is a managing director at JPMorgan instructing a subordinate on how to lie to compliance reviewers. The response to getting caught was not stopping. The response was rehearsing the alibi.

The CME itself had received a complaint from a market participant and opened a formal investigation into Smith. Investigator Brian Wika, who worked in CME’s investigations group for 14 years, testified that Smith’s high cancellation rates were “indicative of spoofing activity — indicative of lack of intent to trade those orders.” He prepared a formal investigative report identifying specific trading episodes as representative examples. The CME found it. The FBI found it. A jury of Smith’s and Nowak’s actual peers found it beyond a reasonable doubt.

The Non-Financial Ledger: Who Actually Paid for This

The Misconduct Precious metals futures markets are not an abstraction. They are the system through which the real-world prices of gold and silver are partially set. Those prices flow downstream into jewelry, electronics, industrial manufacturing, currency hedges, and the retirement savings of ordinary people who put money into commodity-linked funds or inflation-protected assets. When Smith and Nowak moved the market with fake orders, every other trader on the other side of that trade received a worse price than they would have gotten in a fair market. The victims are not nameless. They are the thousands of counterparties who traded in those moments, believing the market was honest.

The structure of the CME’s Globex system runs on a single foundational assumption: every order represents a genuine intent to trade. The court’s own ruling states this plainly. When Smith and Nowak placed massive spoof orders, they were not just breaking a rule. They were counterfeiting the fundamental signal the entire market uses to set prices. Every legitimate trader on that platform was operating on falsified information. The market’s self-correcting mechanism — the one that is supposed to make it “fair” — was being used as the attack vector.

The human cost compounds further when you consider the scope and duration. This was not a one-time lapse. Witness testimony established that spoofing happened several times per day, every day, across years at JPMorgan, and continued when Jordan moved to Credit Suisse. The fraud was institutional, mentored, and sustained. The people who lost money to these trades did not lose it because they made bad decisions. They lost it because the information they were given to make decisions was manufactured by men in a midtown Manhattan office who knew exactly what they were doing.

Jordan told the FBI directly: he spoofed “to mislead the market, to outperform the algorithms, and to get the best possible fills for his boss.” Read that slowly. The goal was to mislead. The goal was to beat the automated systems that other, honest market participants built and paid for. And the goal was to serve the boss. Not the client. Not the market. The boss. The hierarchy of loyalty inside these institutions runs up, never down — and the ordinary investors and pension funds on the other side of these trades paid the tuition for that loyalty every single day.

Legal Receipts: The Quotes That Sealed Their Fate

The Facts These are direct, documented statements from the trial record and appellate ruling. Nothing here is paraphrased or invented.

“Smith once told [Edmonds] that they spoofed because ‘size moves the market’ and would complain ‘[t]hey’re fucking hitting me’ when spoof orders he placed with the intent to cancel were executed.” — Testimony of cooperating witness John Edmonds, U.S. v. Smith, Nowak & Jordan

“After a meeting where JPMorgan compliance officials warned traders to stop spoofing because regulators were looking into it, [Edmonds] heard Smith say to another coworker, ‘There goes the business.'” — Testimony of cooperating witness John Edmonds, U.S. v. Smith, Nowak & Jordan

“While coaching Trunz ahead of a compliance review, Nowak once warned, ‘Remember, every order we placed, we intended to trade.'” — Testimony of cooperating witness Christian Trunz, U.S. v. Smith, Nowak & Jordan

“[Jordan] spoofed ‘to mislead the market, to outperform the algorithms, and to make — and get the best possible fills for his boss.’ The government characterized this interview as a confession.” — FBI Agent Jonathan Luca, testifying about Jordan’s 2018 interview, U.S. v. Smith, Nowak & Jordan

“Smith’s high cancellation rates were ‘indicative of spoofing activity — indicative of lack of intent to trade those orders.'” — CME Investigator Brian Wika, 14-year veteran of CME’s investigations group, testifying at trial

Societal Impact Mapping: Who Else Gets Hurt

Economic Inequality: The Market Was Rigged Against You Specifically

The Misconduct Futures markets are where large institutions, pension funds, commodity producers, and ordinary investors manage their exposure to price swings in gold, silver, and other metals. When Smith and Nowak manipulated prices daily for years, they were extracting value from every counterparty on the other side of their trades. Those counterparties include retirement funds managing money for teachers, firefighters, and public employees. Every tick of price manipulation that went their way was a tick that went against someone else’s portfolio.

The court’s ruling makes clear that the market’s foundational mechanism — the belief that every visible order represents genuine intent — was the instrument of the fraud. The traders who built algorithmic systems to compete fairly, who invested in technology to read supply and demand signals accurately, were all operating on corrupted data. Jordan said it himself: he spoofed specifically “to outperform the algorithms.” The people who played by the rules and built honest tools were the explicit targets of this operation.

JPMorgan is not a small actor. As one of the largest financial institutions on earth, its precious metals desk operated at a scale where this manipulation carried real market weight. The firm acquired Bear Stearns in 2008 — bringing Smith into the fold — and continued running this scheme until 2016. That is eight years of federally convicted market manipulation running through one of the most systemically important banks in the United States, touching every participant in the precious metals futures market during that window.

Public Integrity: What Happens When No One Can Trust the Price

The Misconduct Price discovery is the process by which markets find the “true” price of something based on real supply and demand. That process depends entirely on market participants believing that visible orders are real. Smith, Nowak, and Jordan destroyed that integrity for years, on one of the most important commodity exchanges in the world. The CME’s entire regulatory architecture — Rule 432, the bona fide order requirement, the prohibition on price manipulation — existed precisely to prevent this. It failed to catch them for years.

The Dodd-Frank Act was passed in July 2010 partly to give regulators explicit statutory teeth against spoofing. The fact that Congress had to write a new law to name the practice is itself an indictment of how long the financial industry allowed it to operate without consequence. Jordan’s attorneys tried to use the timing of that law to argue he didn’t know spoofing was wrong. The court rejected that defense entirely, because ignorance of the law is not a defense — and because Jordan himself admitted under oath in 2018 that his goal was “to mislead the market.” There was no ambiguity. There was a choice.

The Cost of a Life Metric

What Now: The People Still in Power and What You Can Do

Who Was Convicted

Who’s Watching Now: Regulatory Bodies With Jurisdiction

What You Can Actually Do Right Now

File complaints about market manipulation with the CFTC’s whistleblower program at whistleblower.gov/cftc. The CFTC awards 10-30% of sanctions collected over $1 million to whistleblowers whose information leads to enforcement. If you work in finance and you know something, that program exists for you.

Support organizations that fight for market transparency and financial regulation: Better Markets, Americans for Financial Reform, and the Roosevelt Institute all track Wall Street enforcement and push for stronger rules. Your $10 monthly contribution to these groups funds the research that keeps regulators accountable when political will runs thin.

Local credit unions and community development financial institutions (CDFIs) are not part of the CME precious metals trading system. Moving your accounts out of the big four banks is a concrete act that reduces the capital base these institutions use to run desks like the one Smith and Nowak ran. Find your local CDFI at findacdfifund.gov. Mutual aid, local organizing, and collective economic withdrawal are the tools that work when regulators are slow. Use them.