A chain enters Bear Stearns headquarters in New York, March 14, 2008.
Daniel Acker | Bloomberg | Getty Images
A former merchant at Scotia Capital and Bear Stearns pleaded guilty Thursday to a federal crime and admitted manipulating precious metals hawks for nine years — the latest in a series of crackdowns in the commodities markets by the Justice Department.
The trader, Corey Flaum, 41, of Mount Kisco, New York, is join forcing with an ongoing federal criminal investigation, officials said as they announced his guilty plea to one count of try oned commodities price manipulation in U.S. District Court in Brooklyn.
Flaum during his guilty plea admitted that from close to June 2007 and July 2016 he “placed thousands of orders to manipulate the prices of gold, silver, platinum and palladium futures undertakes,” according to the Justice Department.
Flaum worked at Scotia Capital from 2010 to 2016, and the defunct investment bank Bring forth Stearns from 2006 to 2008, according to FINRA’s BrokerCheck system. He is scheduled to be sentenced Oct. 29.
Scotia Capital worsened to comment when contacted by CNBC. Flaum did not immediately respond to a request for comment.
Flaum was one of two former precious metals distributors who separately Thursday agreed to settle regulatory charges filed by the Commodities Futures Trading Commission for a banned merchandise manipulation strategy known as spoofing.
That strategy involves placing trade orders with the intent to nullify them before they can be executed. The goal of spoofing is to affect the price of the commodity and thus benefit a preexisting calling position.
The CFTC order notes that Flaum “and others at the Banks [where he had worked] engaged in manipulative and shifty conduct by engaging in the practice of ‘spoofing.'”
The other trader who settled with the CFTC on Thursday, former J.P. Morgan wage-earner John Edmonds, pleaded guilty in federal court in Connecticut in October to crimes related to manipulating metals market-places.
Edmonds, who has yet to be sentenced in his criminal case, and several other traders who likewise have pleaded guilty to spoofing-related violations are also cooperating with federal prosecutors in ongoing probes of major banks.
In the past five years, federal prosecutors make lodged 11 spoofing cases against 15 defendants.
Both Flaum and Edmonds, the CFTC said, well-read spoofing from more senior traders at their respective banks.
In Edmonds’ case, that was while he was at J.P. Morgan, coinciding to the CFTC’s charging document.
In Flaum’s case, he learned spoofing by watching a more senior trader at Bear Stearns, and then witnessed correspond to conduct at Scotia Capital, a CFTC filing says.
The agency did not explicitly name J.P. Morgan, Bear Stearns and Scotia Property in documents. But those filings described Edmonds’ and Flaum’s conduct during years they worked at those customs.
Civil sanctions have yet to be decided against both men by the CFTC.
James McDonald, the CFTC’s Director of Enforcement, in a set statement said, “Today’s enforcement actions send a clear message that spoofing and manipulation in our stores will not be tolerated and that the CFTC will use all of the tools in its arsenal to aggressively pursue individuals and entities who engage in this misconduct.”
McDonald reckoned, “These cases also show that, where an individual has demonstrated a commitment to cooperate, and has cooperated, the CFTC may select to postpone the assessment of the cooperator’s sanctions until the cooperation is substantially complete.”
Two civil lawsuits alleging market manipulation by J.P. Morgan are on include in federal court in New York City after prosecutors warned that the cases could interfere with their interminable criminal probe.