Two at JPMorgan Chase Bank suspended, barred in connection with commodities fraud indictments

Two of three individuals working at JPMorgan Chase Bank, N.A., who were indicted in August of commodities fraud involving precious metals trading have been suspended from their positions at the bank and barred from any future work in “any depository institution,” according to notices signed last month and announced Thursday by the Office of the Comptroller of the Currency (OCC).

The notices pertain to Michael Nowack, formerly the managing director of JPMorgan Chase Bank (Columbus, Ohio), and Gregg Smith, formerly executive director of the bank. The OCC notices state that each has been charged with committing or participating in a crime punishable by imprisonment for a term exceeding one year under federal law.

The notices state that Nowack and Smith were each indicted Aug. 22 in the U.S. District Court for the Northern District of Illinois on, among other things, a felony charge alleging commodities fraud in connection with trading in the precious metals market. The Department of Justice (DOJ) announced the indictments Sept. 16.

That DOJ release states that each of the three indicted was charged with one count of conspiracy to conduct the affairs of an enterprise involved in interstate or foreign commerce through a pattern of racketeering activity (more commonly referred to as RICO conspiracy); one count of conspiracy to commit wire fraud affecting a financial institution, bank fraud, commodities fraud, price manipulation and spoofing; one count of bank fraud and one count of wire fraud affecting a financial institution. “In addition, Smith and Nowak were each charged with one count of attempted price manipulation, one count of commodities fraud and one count of spoofing,” the release states.

In its November notices, the OCC stated that the indictments, the negative publicity created by the pending criminal actions, the serious nature of the charges, the fact that such charges involve dishonesty or breach of trust, and the respondents’ management and oversight positions “threaten to impair public confidence in the integrity of the Bank.”

The OCC notices were announced with a release on recent agency enforcement actions. Others on the list include a $98,415 civil money penalty over flood insurance violations; a formal agreement; a cease-and-desist order; and three terminations of enforcement actions.

OCC Enforcement Actions and Terminations

DOJ release