JPMorgan Metals Probe Spurs U.S. to Ask for Delay in Civil Suit

(Bloomberg) -- The Justice Department’s investigation of manipulation in the precious-metals markets at JPMorgan Chase & Co. spurred prosecutors to ask a judge to delay a civil lawsuit focusing on similar misconduct.

Former trader John Edmonds pleaded guilty last month to federal charges that he placed hundreds of orders in the futures market he never intended to execute, in a six-year spoofing scheme. On Monday, the Justice Department asked the judge overseeing an antitrust lawsuit against JPMorgan to delay the case for six months to “protect the integrity” of its ongoing criminal probe.

JPMorgan didn’t immediately respond to an email seeking comment.

The request signals that the government is aggressively moving ahead with its inquiry. The charges are part of a broad U.S. crackdown on techniques such as spoofing, a trading practice designed to create fake demand that pushes prices up or down to generate profits. Long considered disreputable but rarely dangerous, spoofing has emerged in an era of computerized trading as a deeper threat to markets.

In his plea to conspiracy and commodities fraud in federal court in Connecticut, Edmonds admitted that he and other traders sought to manipulate futures markets for gold, silver, platinum and palladium on the Nymex and Comex exchanges, prosecutors said.

The Justice Department request for a delay came after lawyers for the plaintiffs in the civil antitrust suit asked a judge to allow them to re-interview Edmonds’s immediate supervisors, saying their testimony will “demonstrate a pattern and practice of intimidation” consistent with the view that JPMorgan created barriers to entry in the “thinly traded” market.

The case is U.S. v. Edmonds, 18-cr-239, U.S. District Court, District of Connecticut (Hartford).

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