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JPMorgan Precious Metals Probe Expands as Another Is Charged

Steve Stroth

(Bloomberg) -- Another JPMorgan Chase & Co. official was charged in the U.S. probe of the bank’s precious metals trading operation.

Jeffrey Ruffo, a former JPMorgan executive director on the metals desk in New York who specialized in hedge fund sales, was charged with fraud conspiracy and racketeering conspiracy, according to a superseding indictment made public Friday in federal court in Chicago.

The allegations are part of a broader investigation of market spoofing that has now resulted in charges against six bank employees. Indictments against Michael Nowak -- JPMorgan’s global head of precious metals trading -- and Gregg Smith were made public in September and they have pleaded not guilty. Another defendant, Christopher Jordan, plans to plead not guilty, according to his lawyer. All three have been free on bond since their arrests.

Ruffo, 56, worked at the bank from about 2008 until August 2017, court records show. Prosecutors claim he worked with the other defendants to coordinate precious metals transactions to benefit big hedge fund clients, who were a key source of the bank’s revenue.

In one instance in January 2012, when a hedge fund client wanted to sell 93,200 ounces of gold, Ruffo alerted JPMorgan traders who then placed deceptive orders to buy gold futures in an attempt to push prices higher, according to the indictment. Ruffo will be arraigned in Chicago on Dec. 5, court documents show.

“Mr. Ruffo, throughout his career, acted conscientiously and in good faith,” his attorney, Guy Petrillo, said in an email. “He will vigorously contest these unfounded and regrettable charges.”

Long considered disreputable but rarely dangerous, spoofing has emerged in an era of computerized trading as a deeper threat to markets. The Justice Department has brought criminal charges against traders who worked at banks including Deutsche Bank AG and UBS Group AG. At least seven have pleaded guilty, one was convicted at trial and another was acquitted.

Earlier, two other former JPMorgan traders, John Edmonds and Christiaan Trunz, were charged with being part of the alleged conspiracy. Edmonds pleaded guilty. Trunz also pleaded guilty and is cooperating with prosecutors.

The case is U.S. v. Smith, 19-cr-669, U.S. District Court, Northern District of Illinois (Chicago).

(Updates with arraignment date and comment from Ruffo attorney. Earlier version corrected profession of Ruffo in the headline.)

--With assistance from Edvard Pettersson and Tom Schoenberg.

To contact the reporter on this story: Steve Stroth in Chicago at sstroth@bloomberg.net

To contact the editor responsible for this story: David Glovin at dglovin@bloomberg.net

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