The news that Bart Chilton, the former commissioner of the CFTC, suddenly passed away was truly sad but also shocking, so much so that some were given to fabricating conspiracy-type explanations. Chilton certainly had a larger than life persona and many came to appreciate his colorful pronouncements, enthusiasm and willingness to respond to just about everyone who contacted him – qualities quite rare in a regulator. I learned this first-hand very early on when I started communicating with Chilton shortly after he became commissioner in 2007, as I recounted not even a month ago in reaction to his last known interview, with Chris Marcus from Arcadia Economics –
I stated in the first sentence of that article that Chilton’s interview nearly knocked me off my feet, but I didn’t fully explain why that was so, which I’d like to rectify today. Yes, I found the interview shocking because Chilton seemed to confirm much of what I had contended for more than a decade, but it was much more than that. I was confounded because I couldn’t quite fathom what prompted Chilton to “spill the beans” about the inner workings at the agency regarding JPMorgan’s manipulation of silver after so many years. After all, there was never any acknowledgement from the “inside” that the Commission was quite close to cracking down on JPMorgan – Chilton’s clear admission of this in his interview was the first ever. And perhaps the last.
With the revelation that Chilton was dying from pancreatic cancer, I was confounded no more - Bart Chilton was setting the record straight before his passing – perhaps the most noble act of a life that was more than notable. It is regretful that it would take such unfortunate circumstances – the immediacy of pending death – for the revelation to be made. While the burden on Chilton has been lifted, what does this say about all the other past and current officials at the agency and elsewhere who have chosen to remain silent about a matter of vital public interest?
The hundreds of meetings that Chilton had concerning JPMorgan’s excessive and manipulative short positions starting in 2008 featured other participants, not just Chilton. Most of these other participants have been quick to publicly lament his untimely passing, but still appear bound by some type of strict inner code not to admit to what Chilton admitted – the revelation that JPMorgan had been manipulating the price of silver (and gold) since it took over Bear Stearns in 2008. I thought all these officials took an oath of office to abide by the constitution and the rule of law – not to continue to conceal that JPMorgan was breaking the law in full view.
Bart Chilton set the record straight and for that he is to be commended and remembered. But what about those who have remained silent or worse, continue to deny that JPMorgan is at the heart of an ongoing manipulation? The most serious market crime of all is price manipulation and the fact that the CFTC refuses to deal with the silver manipulation openly and honestly is absolutely shameful.
Another matter that has continued to puzzle me is that lack of any public reaction or admission by JPMorgan that it has been openly accused of manipulating the silver and gold markets. I think I understand JPM not challenging my allegations over the past decade that it is manipulating these markets because it seeks to avoid a potential quagmire – although the thought of a major financial institution turning its back on open allegations of criminal activity without reaction is unprecedented.
But I’ve also been puzzled how JPMorgan could possibly avoid public acknowledgement that it is the subject of criminal investigation by the Justice Department as a result of the DOJ’s announcement on Nov 6 which unsealed a guilty plea by one of the bank’s former traders and an ongoing investigation into precious metals manipulation. It is, after all, a legal requirement that public companies disclosed material information – which being involved in a criminal investigation by the US Department of Justice would qualify. However, that particular puzzle has been solved with the following statement in the JPMorgan 10-K and annual reports.
Here’s the statement from JPMorgan’s recently released 10-K report, page 280 –
“Precious Metals Investigations and Litigation
Various authorities, including the Department of Justice’s Criminal Division, are conducting investigations relating to trading practices in the precious metals markets and related conduct. The Firm is responding to and cooperating with these investigations. Several putative class action complaints have been filed in the United States District Court for the Southern District of New York against the Firm and certain current and former employees, alleging a precious metals futures and options price manipulation scheme in violation of the Commodity Exchange Act. The Firm is also a defendant in a consolidated action filed in the United States District Court for the Southern District of New York alleging monopolization of silver futures in violation of the Sherman Act.”
Of course, it remains to be seen if the Justice Department will confine its investigation to the narrow issue of spoofing or will it open its eyes to the much more serious and pernicious overall manipulation by JPMorgan over the past eleven years; in which JPMorgan never once suffered a loss in trading COMEX silver and gold futures, only profits, and by which the crooked bank amassed 850 million physical silver oz and 20 million oz of gold on the down low.
It has now been exactly one year since I formally and privately complained to the Justice Department about JPMorgan’s manipulation of the silver market and the CFTC’s malfeasance in dealing with it. Initially, I did think that there might be a connection between my complaint and the DOJ’s announcement of the guilty plea and ongoing investigation six months later on Nov 6, but feel less so today. I hope I’m wrong and the Justice Department has a good sense of what’s really going on with JPMorgan in silver and gold, but I’d be lying if I told you my confidence was still high in that regard.
Primarily, my confidence in the DOJ doing the right thing has sagged because the manipulation is continuing while the investigation is supposedly in force. In other words, the serial killer (JPM) is still littering the countryside with bodies, while the Justice Department appears to be contemplating its belly button. I’m not aware of any legitimate law enforcement process that allows for new crimes of the very same type to be committed continuously in the course of an investigation. I just hope the DOJ handles allegations of terrorism with more care than it appears to handle allegations of serious market crimes. As I said, I hope I’m wrong.
May 2, 2019