(Bloomberg) - A former JPMorgan Chase & Co. precious metals trader who admitted to spoofing and market manipulation avoided prison on Tuesday because he helped the government win convictions of his supervisors.
Christiaan Trunz spent three days last year testifying in the trial of Michael Nowak, who ran JPMorgan’s precious-metals operation, and chief gold trader Gregg Smith. Trunz described for federal jurors in Chicago how Smith and Nowak used huge buy and sell orders, which they quickly canceled and never intended to execute, to push prices in the direction they wanted to benefit the bank or its customers.
Trunz pleaded guilty in 2019 to spoofing and conspiracy charges — admitting he used some of the same techniques he’d learned from Nowak and Smith — and he agreed to cooperate with prosecutors. Nowak and Smith are scheduled to be sentenced in August. Another JPMorgan trader, Christopher Jordan, was convicted in a separate spoofing trial and is slated to be sentenced in September.
US District Judge William Kuntz in Brooklyn, New York, sentenced Trunz to time served.
The JPMorgan case was one of several brought by the government in a crackdown on market manipulation over the past decade, which led to convictions of other traders, including at Deutsche Bank AG and Bank of America Corp.’s Merrill Lynch unit. In 2020, JPMorgan paid more than $920 million in a criminal penalty after obtaining a deferred prosecution agreement with the US for spoofing.
Prosecutors and defense lawyers had argued against Trunz spending time behind bars, saying in court filings that he’d been helpful in building the US case against JPMorgan and the other traders. If not for his cooperation, he could have faced 70 to 87 months in prison under sentencing guidelines, they said.
According to the government, the conspiracy by JPMorgan generated profits for its precious metals operation and caused more than $55 million in losses to thousands of victims between 2008 and 2016.
Trunz began working as a junior trader after graduating from Georgetown, and his main job at the time “was to pick up sandwiches for the team and to sit there and listen and learn,” his lawyers Katya Jestin and Anthony Barkow said in the sentencing memo. “Christiaan learned to spoof because he was taught to spoof by his senior colleagues and supervisors on the precious metals desk.”
Trunz was 22 when he joined Bear Stearns, which became part of JPMorgan after the 2008 financial crisis, and he testified that he learned to trade by watching Smith and Nowak. He “eventually” realized he was committing a crime and agreed to cooperate with authorities, his lawyers said.
“Mr. Trunz was very much a junior member of the conspiracy,” prosecutors said.
The case is US v. Trunz, 19-cr-00375, US District Court, Eastern District of New York (Brooklyn).
By Patricia Hurtado
