In Ted Butler's Archive


The U.S. Justice Department and Commodity Futures Trading Commission have settled the precious metals spoofing/manipulation case which first came into view in November 2018 with the announcement of a guilty plea by a former JPMorgan trader. The total fine of $920 million was the largest in CFTC history and the settlement included a Deferred Criminal Prosecution Agreement, the third such agreement involving precious metals manipulation. BankAmerica and Scotiabank previously entered into similar agreements. The settlement narrowly focuses on spoofing, the illegal short term trading device and not the much more serious long term suppression of silver and gold prices that JPMorgan has been guilty of since 2008.

So while the Justice Department took a pass on going after JPMorgan on the much more serious grounds of price suppression and the accumulation of physical silver and gold at the manipulated prices it created by excessive short selling, at least it dinged JPM pretty good. While the $920 million monetary penalty is the largest in CFTC history, to JPMorgan, it is nickels and dimes. The same cannot be said of the Deferred Criminal Prosecution Agreement (DPA); because this is not JPMorgan’s first DPA. The only thing worse is a straight criminal prosecution, which would, effectively, put a financial institution out of business (think Arthur Anderson). A DPA carries serious ramifications and you can be sure that it has gotten JPM’s attention.

None of these banks would be so foolhardy to violate the terms of their agreements with the Justice Department. These agreements are not limited to spoofing; they include all manner of activities considered illegal or manipulative. You can be sure that JPMorgan and the other banks, even those not charged, will remain on the up-and-up in precious metals for the foreseeable future. This should end the decades-old COMEX manipulation. I think this settlement is far more significant than is widely believed. If JPMorgan abides by the terms of the Deferred Criminal Prosecution Agreement and ceases to engage in manipulative trading practices, it’s hard for me to see how silver (and gold) prices don’t soon soar.

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