Former JPMorgan traders argue against ex-Morgan Stanley trader testimony

Former JPMorgan traders Gregg Smith, Michael Nowak, Jeffrey Ruffo, and Christopher Jordan, who stand accused of spoofing the precious metals market, are pushing against the testimony of another trader, who is now an FBI agent.

This becomes clear from documents filed at the Illinois Northern District Court and seen by FX News Group.

Defendants Gregg Smith, Michael Nowak, Jeffrey Ruffo, and Christopher Jordan have submitted a memorandum of law in support of their motion to exclude the expert witness testimony of Agent Jonathan Luca.

The government has disclosed that Agent Luca will testify as both a fact witness and an expert witness concerning purportedly “commonly understood” trading-related terminology (“iceberg”, “bid”, “offer”, etc), including language that the government contends relates to alleged spoofing and barrier running.

The government asserts that Agent Luca is qualified to provide this testimony based on his experience as a precious metals trader at Morgan Stanley 10 years ago, and his investigation of this case and other spoofing cases.

The defendants note that Agent Luca’s prior testimony makes clear that he has only two to three years of actual trading experience on a one or two-person trading desk where he traded precious metals futures and spot contracts.

Furthermore, according to the defendants, Agent Luca’s experience does not make him an expert with respect to the meaning of the terms about which he proposes to testify. His testimony appears to be principally based on reading communications and speaking with government witnesses about their meaning. According to the defendants, Agent Luca’s experience does not qualify him to define terms specifically related to barrier options, such as “run a barrier”.

For example, the government intends to elicit from Agent Luca the meaning of the following quotations from chats:

  • “when I need to get filled I will bid or offer size in front of it”
  • “they take my hidden offer every time, as I bid in front of it”
  • “anywhere close I will make it print”
  • “make it look bid but sell”

These are defendants’ unique statements which are not the type of coded language about which courts have found expert testimony to be appropriate, the defendants sargue. With respect to particular statement of the defendants that are unique to this case, Agent Luca’s opinions cannot be sufficiently grounded in his professional experience to be permissible expert testimony, they say.

Back in 2019, the DOJ launched criminal proceedings against the former JPMorgan precious metals futures traders. 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.

As FX News Group has reported, the Department of Justice plans to call 34 witnesses to testify at trial.

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