Orders that were never meant to become trades
For years, traders inside JPMorgan displayed orders they did not intend to complete. The orders made markets look as though more buying or selling interest existed than was real. Other participants reacted, helping the traders execute genuine orders on better terms. In September 2020, JPMorgan Chase & Co. admitted wrongdoing and agreed to a $920.2 million resolution covering separate schemes in precious-metals and U.S. Treasury markets. [1, 2]
On the precious-metals desk, Michael Nowak was a managing director running the global business; Gregg Smith was an executive director and a trader in New York. Their seniority matters: the later prosecutions concerned experienced traders within an established operation. But the corporate case and each person’s case had different charges, evidence and outcomes. The bank’s agreement did not determine that every accused employee was guilty. [1, 4, 5]
The trade underneath the deception
A futures contract fixes terms for buying or selling an asset at a future date. Traders can offer to transact at specified prices, and the visible orders help other participants judge supply and demand. Orders can legitimately be cancelled before execution. The crucial distinction in this case was intent when the order was placed: the challenged orders were submitted to mislead others, with the intention of withdrawing them. [5]
The appeals court described a recurring sequence. A trader first entered an order he genuinely wanted filled, sometimes revealing only part of its size. He then placed large visible orders on the opposite side. If he wanted to buy more cheaply, apparent selling pressure could push other participants toward lower prices. Once his genuine purchase executed, he cancelled the misleading sell orders. The reverse sequence could help a seller. The profit came from the completed trade, while the cancelled orders supplied the false signal. [5]
This was not a claim that every cancellation was unlawful or that every market move during the period resulted from manipulation. The evidence connected repeated sequences, sharply different execution rates and witness testimony to a specific purpose. The corporate admissions described tens of thousands of unlawful precious-metals episodes; the futures regulator described hundreds of thousands of spoof orders. Episodes and individual orders are different units, so the figures are not competing counts of the same thing. [1, 2, 5]
Two schemes, several markets
The precious-metals conduct covered roughly March 2008 through August 2016 and involved gold, silver, platinum and palladium futures. The Justice Department also described certain trades intended to trigger or defend barrier options held by the bank. Such options depend on whether a price reaches a specified boundary, creating a financial reason to influence that price. This was an additional feature of the admitted conduct, not a description of every spoofing sequence. [1]
The Treasury scheme ran roughly April 2008 through January 2016 on desks in New York and London. It included futures and the secondary cash market, where already-issued Treasury notes and bonds change hands. Those are related markets but distinct products. The SEC’s narrower proceeding concerned the cash-securities conduct between April 2015 and January 2016. [1, 3]
In that cash-market case, J.P. Morgan Securities LLC admitted placing genuine orders alongside orders on the opposite side that traders did not intend to execute. The latter created an appearance of demand or supply; they were promptly cancelled after the genuine orders obtained advantageous executions. Naming the securities subsidiary is important because it, rather than an undifferentiated reference to the entire banking group, was the respondent in the SEC order. [3]
How the behavior came into view
The evidence was not confined to an unusual chart. The Commodity Futures Trading Commission found that J.P. Morgan Securities failed to respond adequately to surveillance alerts, exchange and regulatory inquiries, and an internal allegation by a trader. Its order said the firm failed to identify, investigate and stop the misconduct. It also found that some early responses to investigators were misleading, while recognizing significant cooperation later. [2]
Individual cooperation then exposed how the trading worked from inside the desk. John Edmonds pleaded guilty in 2018, and Christian Trunz pleaded guilty in 2019. At Smith and Nowak’s trial, former colleagues described seeing the practice and learning it from other traders. The appeals court recounted that an exchange investigation into Smith began after another market participant complained. These were multiple forms of evidence about conduct, rather than simply the bank accepting a corporate payment. [1, 5]
A finance expert analyzed 100 identified trading episodes. For Smith, 0.18% of contracts in the purported spoof orders were filled, compared with 79.11% of contracts in his genuine orders; Nowak’s corresponding fill ratios were 0.22% and 90.11%. These are percentages of contracts filled in the analyzed episodes, not percentages of orders or bank-wide trading. The prosecution combined the pattern with messages and testimony about intent. Smith and Nowak argued that their behavior had innocent explanations and that prosecutors had not proved the required state of mind. [5]
The September 2020 corporate resolution
On September 29, 2020, the Justice Department announced a three-year deferred prosecution agreement with JPMorgan Chase & Co. over two wire-fraud counts. The parent accepted the admitted facts and monetary obligations while prosecution was deferred subject to the agreement. The CFTC separately settled with the parent, JPMorgan Chase Bank, N.A., and J.P. Morgan Securities LLC. The SEC settled with the securities subsidiary, which admitted its findings and the specified Securities Act violation. [1, 2, 3]
The exact combined criminal monetary amount was $920,203,609: $436,431,811 as a penalty, $172,034,790 as disgorgement of gains and $311,737,008 as victim compensation. The categories answer different questions. A punitive assessment is not the same as the firm’s gains or compensation for other participants; the entire $920.2 million should not be described as a trading-loss figure. [7]
The parallel orders also contained credits and offsets. The SEC’s $10 million disgorgement was credited against the criminal disgorgement, and its $25 million civil penalty was offset by payments in the parallel proceedings. The CFTC and DOJ obligations likewise recognized overlapping payments. Adding each agency’s headline total would therefore count the same dollars more than once. [1, 2, 3, 7]
Why prosecution was deferred
The Justice Department cited serious aggravating factors: an eight-year pattern, the absence of full voluntary self-disclosure and the company’s prior criminal history involving foreign-exchange trading. It also credited cooperation and remediation. The bank had removed implicated employees, increased compliance resources, changed surveillance and strengthened supervision and training. Prosecutors concluded that the improved program made an independent compliance monitor unnecessary. That was a judgment supporting the resolution, not a finding that the original misconduct was minor. [1]
The agreement required continuing cooperation, reporting of potential violations and reporting on compliance improvements. The three-year term expired on September 29, 2023. On March 29, 2024, prosecutors sought dismissal with prejudice because, among other reasons, JPMorgan had met its obligations; the court granted the motion that day. The Justice Department now lists the corporate criminal matter as closed. [7]
The individual trials produced a mixed verdict
In August 2022, a jury convicted Smith and Nowak of substantive offenses including fraud, attempted price manipulation and spoofing. It acquitted them of the conspiracy charges, including racketeering conspiracy. Salesperson Jeffrey Ruffo, charged only with racketeering and conspiracy, was acquitted of both. The verdict therefore rejected part of the prosecution’s broader theory while finding the two traders guilty on other counts. [5, 6]
In August 2023, Smith received two years in prison and a $50,000 fine; Nowak received one year and one day and a $35,000 fine. A separate jury convicted former trader Christopher Jordan of wire fraud. On August 20, 2025, the Seventh Circuit affirmed the convictions of Smith, Nowak and Jordan, rejecting their arguments that the spoofing conduct could not sustain fraud convictions and their remaining trial challenges. [4, 5]
The appellate ruling explained why an order that never executes can still matter. Other traders see it as genuine trading interest and make decisions on that basis. Cancellation does not undo the benefit already obtained on the real order. The court also upheld the sufficiency of the evidence of intent; its reasoning was tied to the proven conduct, rather than a general prohibition on withdrawing orders. [5]
A later civil chapter
On January 16, 2026, the CFTC announced resolving its separate case against Smith and Nowak. Smith was ordered to pay a $200,000 civil penalty and received a three-year trading and registration ban; Nowak was ordered to pay $150,000 and received a six-month ban. Those are the durations imposed, not a claim that both bans remain in force as of this article. The civil penalties were separate individual outcomes from their criminal fines and the bank’s corporate resolution. [8]
The case’s lasting significance lies in the connection between information and execution. The false orders did not need to remain on the screen for long or become completed trades to affect another participant’s price. Years of transactions were reconstructed through order records, communications and people who had worked alongside the defendants. The resulting history includes admitted corporate misconduct, a completed deferred prosecution agreement, convictions, acquittals and later civil settlements, each with its own legal meaning. [1, 5, 6, 7, 8]
Sources
- Justice Department: JPMorgan resolution covering precious metals and U.S. Treasuries, September 29, 2020Official sourceBack to text: ↑1↑2↑3↑4↑5↑6↑7↑8↑9↑10
- CFTC: order against JPMorgan parent, bank and securities subsidiary, September 29, 2020Official releaseBack to text: ↑1↑2↑3↑4↑5
- SEC: J.P. Morgan Securities admitted cash-Treasury findings and payment offsets, September 29, 2020Filing / reportBack to text: ↑1↑2↑3↑4
- Justice Department: Smith and Nowak prison sentences, August 22, 2023Official sourceBack to text: ↑1↑2
- Seventh Circuit, United States v. Smith, Nowak and Jordan, August 20, 2025 (opinion reproduced by FindLaw)SourceBack to text: ↑1↑2↑3↑4↑5↑6↑7↑8↑9↑10
- Reuters: convictions and acquittals at the precious-metals trial, August 10, 2022SourceBack to text: ↑1↑2
- Justice Department case status: corporate criminal case dismissed March 29, 2024; checked October 5, 2026Official sourceBack to text: ↑1↑2↑3↑4
- CFTC: individual Smith and Nowak civil penalties and trading bans, January 16, 2026Official releaseBack to text: ↑1↑2