Former Precious Metals Trader Pleads Guilty to Commodities Fraud and Spoofing Conspiracy
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.