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Ex-Precious Metals Trader Admits To Commodities Fraud

U.S. District Court in Hartford.
U.S. District Court in Hartford. Photo Credit: File

A precious metals trader from New York is facing time behind bars after admitting in district court in Connecticut to commodities fraud and a spoofing conspiracy for his role in a trading scheme to deceive the precious metals futures contracts markets.

Brooklyn resident John Edmonds, a former precious metals trader at a federal bank, admitted that from 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

Edmonds stated that he and the other precious metals traders at the bank would routinely place orders for precious metals futures contracts with the intent to cancel those orders before execution.

According to prosecutors, “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.

Edmonds, 36, 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. He pleaded guilty in Hartford district court to one count of commodities fraud and one count of conspiracy to commit wire fraud, commodities fraud, commodities price manipulation and spoofing. He is scheduled to be sentenced on Dec. 19 in 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,” Assistant Attorney General Brian Benczkowski stated. “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.”

U.S. Attorney John Durham added, “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. The investigation of deceptive trading practices by others involved in this scheme is ongoing.”

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