CFTC confirms advisor exposure to confidential info in JPMorgan investigation
The United States Department of Justice (DOJ) has made another push to force the disqualification of an expert witness whom former head of JPMorgan’s precious metals desk Michael Nowak seeks to hire.
The expert witness in question is Jeremy Cusimano, a former advisor of the Commodity Futures Trading Commission (CFTC). According to the DOJ, Cusimano’s involvement in an investigation of alleged manipulative activity in the precious metals markets by JPMorgan traders (the “CFTC Silver Investigation”), will lead to a conflict of interest, if he gets hired by Nowak as a witness in the present criminal case.
On January 26, 2021, the DOJ filed a document with the Illinois Northern District Court once again explaining that Cusimano’s role in CFTC Silver Investigation should prevent him from being an expert witness in the present criminal case.
The current criminal case was launched back in 2019. The DOJ commenced criminal proceedings against Nowak, former head of JPMorgan’s precious metals desk, Gregg Smith and Christopher Jordan. The indictment alleges that the defendants engaged in widespread spoofing, market manipulation and fraud while working at JPMorgan through the placement of orders they intended to cancel before execution in an effort to create liquidity and drive prices toward orders they wanted to execute on the opposite side of the market.
The CFTC Silver Investigation targeted some of the defendants in the criminal case. Hence, the link with the criminal case and the DOJ’s concerns.
The CFTC Silver Investigation arose from complaints regarding silver prices that focused on allegations that prices for silver futures contracts were being manipulated. In September 2008, the CFTC publicly confirmed that it was investigating these complaints about possible unlawful activity in the silver market, and the investigation continued until September 2013 when the CFTC publicly announced that it had closed the investigation without recommending charges.
In the CFTC Silver Investigation, Nowak and his co-defendant Christopher Jordan both provided sworn testimony to the CFTC investigative team, including Cusimano.
Nowak was the head of JPMorgan’s precious metals desk, which was a focus of the CFTC Silver Investigation, and now he seeks to retain Cusimano, who was a key part of the CFTC investigative team.
Now, the DOJ has addressed the CFTC itself to provide clarity in the matter. On January 22, 2021, the CFTC sent a letter to the government, copying Nowak’s counsel, that provided additional information regarding Cusimano’s involvement in the CFTC Silver Investigation.
The CFTC stated:
“We have reviewed the parties’ briefs regarding Mr. Cusimano and can confirm . . . Mr. Cusimano’s analysis of Mr. Jordan and CC-3’s trading activity and his participation in related briefings, discussions, or e-mail correspondence did in fact expose him to the CFTC’s strategic thinking with respect to the Silver Investigation . . . including the CFTC’s privileged internal discussions and analysis with respect to, for instance, Messrs. Jordan and Nowak’s CFTC testimony (such as testimony concerning electronic communications involving Messrs. Jordan and Nowak and other traders), and whether Messrs. Jordan or [CC-3] had engaged in manipulative trading of precious metals futures”.
The DOJ argues that this additional information removes any doubt that Cusimano impermissibly would be “switching sides” if he were allowed to testify in the manner proposed by Nowak, as it confirms that Cusimano’s role in the CFTC Silver Investigation did expose him to confidential information that is directly relevant to core allegations in this criminal case.
The DOJ concludes that these circumstances create a conflict of interest that mandates Cusimano’s disqualification in order to protect and preserve the integrity and fairness of judicial proceedings.