The United States Department of Justice (DOJ) has stood behind the second superseding indictment of former JPMorgan traders Gregg Smith, Michael Nowak, Christopher Jordan, and Jeffrey Ruffo. On January 31, 2022, the DOJ filed a set of documents with the Illinois Northern District Court, opposing the traders’ attempt to dismiss the indictment.

Let’s recall that the Second Superseding Indictment charges the traders with:

• Conspiracy to conduct or participate in an enterprise engaged in a pattern of racketeering activity;
• Conspiracy to commit price manipulation, wire fraud affecting a financial institution, commodities fraud and spoofing;
• Attempted price manipulation;
• Wire fraud affecting a financial institution;
• Commodities fraud;
• Spoofing.

As FX News Group has reported, the defendants have pleaded not guilty to the charges.

Now, the DOJ is seeking to convince the Court that the case should not be dismissed. In the documents submitted on Monday, January 31^st, the DOJ argues that the Second Superseding Indictment in this case largely mirrors the First Superseding Indictment that the Court previously analyzed and principally upheld over defendants’ prior motion to dismiss.

In their Motion, the defendants focus on two new overt acts in the Second Superseding Indictment related to barrier-running that are alleged as acts in furtherance of the RICO conspiracy and are incorporated by reference into subsequent counts. According to the DOJ, the two barrier-running overt acts, however, do not require the Court to reconsider its prior ruling regarding the sufficiency of the indictment for several reasons.

First, the general barrier-running allegations in the Second Superseding Indictment are identical to those that the Court analyzed in the First Superseding Indictment, and the two specific instances of barrier-running alleged to be overt acts fall squarely within those general barrier-running allegations.

Specifically, both indictments allege that the defendants defrauded JPMorgan clients who had bought or sold barrier options “by trading in a manner that was calculated to push the price of the underlying assets away from the price point at which [Bank A/JPMorgan] would lose money on the options and toward the price point at which [Bank A/JPMorgan] would profit from the options.”

The DOJ says that, accordingly, the Court need not revisit its ruling that the barrier-running allegations sufficiently plead violations of wire and commodities fraud.

Second, the Court previously held that the alleged spoofing and barrier-running constitute a single scheme for purposes of the attempted price manipulation counts. Incorporating two examples of barrier-running into those counts is proper, and the defendants’ argument that these examples are time-barred is meritless, the DOJ says. Moreover, incorporating the two barrier-running examples into the attempted price manipulation counts does not materially broaden the charges since those counts always included barrier-running.

Ultimately, the defendants’ Motion largely revisits arguments in their motion to dismiss the First Superseding Indictment, which the Court has considered and rejected, and the defendants have failed to demonstrate why these recycled arguments should not be denied a second time, the DOJ concludes.

The trial of the defendants has been scheduled for July 5, 2022.