A pair of former JPMorgan Chase traders have been sentenced to prison for engaging in fraud, attempted price manipulation and spoofing.

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

The Justice Department said that the pair, former precious metal traders at the bank, engaged in the fraudulent practices as part of a market manipulation scheme that took place between May 2008 and August 2016. The scheme involved tens of thousands of unlawful trading sequences, and resulted in over $10 million in losses to market participants.

While fraud and price manipulation have always been serious financial crimes, spoofing – the practice of placing and then quickly cancelling orders to inflate the image of high demand or supply – was only outlawed in 2010 in the US as part of the Dodd-Frank Act.

Nicole M. Argentieri, acting assistant attorney general of the Justice Department’s Criminal Division, said: “The defendants used their positions as some of the most powerful traders in the worldwide precious metals markets to engage in an egregious effort to manipulate prices for their benefit.

“This case reaffirms the Department’s steadfast commitment to hold accountable those who engage in fraud and manipulation that undermines the investing public’s trust in the integrity of our commodities markets.”

The sentencing comes after Smith and Nowak were found guilty of fraud and other charges in 2022. Nowak was convicted on over a dozen charges while Smith was convicted on 11 charges. The pair were acquitted of racketeering and conspiracy.

Luis Quesada, assistant director of the FBI’s Criminal Investigative Division, added: “In order to maintain economic security, investors in equity and commodities markets must have confidence that exchanges are operated in a transparent and equitable manner, and that investments are free from manipulation and fraud.

“Today’s outcome should serve as a reminder that the FBI remains highly focused on combating bad actors conducting sophisticated fraud schemes targeting the securities and commodities markets.”

JPMorgan in 2020 admitted to committing wire fraud in connection with unlawful trading in the markets for precious metals futures contracts; and unlawful trading in the markets for US Treasury futures contracts and in the secondary (cash) market for US Treasury notes and bonds. The bank agreed to pay more than $920 million in penalties.

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