Another Silver Manipulation Trader Busted | Scotia & Bear Sterns

Another former commercial bank precious metals derivative trader pleaded guilty to manipulating precious metal futures contract prices.

The same COMEX and NYMEX price discovery critical futures contracts that help determine physical gold, platinum, palladium, and silver bullion prices, day after day.

This most recently guilty precious metal trading traitor is a 41-year-old from the state of New York, Corey Flaum.

He is now in cooperation with an ongoing investigation by the US Justice Department. The Department of Justice is also allegedly digging further into if and who at JP Morgan manipulated precious metal prices over a similar timeframe.

From June 2007 until July 2016, Flaum admitted that he “placed thousands of orders to manipulate the prices of gold, silver, platinum and palladium futures contracts.”

This now guilty trader's illegal highly profitable actions, arguably have hurt bullion and precious metal mining investors for those same nine years collectively.

While initially trading for bankrupt Bear Sterns (an industry noted silver shorting commercial bank). The same failed commercial bank that partially had its lost heavy-handed short side bets to silver’s price strength in late 2007 and into early 2008.

This guilty trader then scurried over to ScotiaBank's subsidiary precious metals trading desk and spoofed and manipulated precious metal prices while working there into 2016. That is the same PM derivative trading desk which failed recently in selling itself to anyone in the market.

All this after Scotia Capital allegedly had its parent bank, Scotiabank, help out in handling excessive short-side losses as the silver spot price blasted higher in early 2016. Then the silver price went from around $14 to $21 oz in a matter of months.

The now modern record silver position holder, JP Morgan inherited a bankrupt Bear Sterns silver short position in spring 2008. Corey Flaum was not valuable enough for JP Morgan to hire. There was another former head Bear Stearn desk trader, who allegedly got hired by JP Morgan. And then apparently helped them to some substantial short side winning trades as the 2008 financial crisis ensued in full.

Former CFTC Commissioner Confirms JP Morgan Increasingly Short 2008-2009

NOTE: The current CFTC has also publically cited both two admitted spoof precious metals price manipulating traders. 


Justice by Simply Busting Small Fry Spoof Trades?

Federal prosecutors over the last five years have busted 15 defendants via 11 spoofing cases.

None of these busts have gone on to guilty pleas from any higher up directors. The managers who perhaps either trained or looked the other way as this kind of illegal trading went on for years in the precious metal derivative markets.

Just a month ago a Merrill Lynch precious metals trading subsidiary got a paltry $25 million fine as similar illegal activities happened on its trading desk. No one working there went to white-collar Federal prison. Investors harmed in the process will likely never see any compensation.

Here is how profitable the act of rigging precious metal markets at the right times can be.

Spoof Trades and Shorting Heavy Can Produce Staggering Profits 

The precious metals price discovery markets are not run by small fry traders but institutions.

What of any message remains?

White-collar criminals at your own risk, rake your bonuses as you conspire. And use your heads, morons, do so without documentation.

Corporate companies and shareholders enjoy the dividends as you look the other way. And then pay the paltry fines perhaps if your company ever indeed, gets caught or coerced.

As well, none of these recent busts take into account all the apparent rigging of prices that likely took place in the London price-fixing schemes of gold and silver since the middle 1980s.

Daily price data compounding at the 15:41 mark, in this LBMA Gold Price Transparency Video illustrates that allegation. Later in that same video, you can also see how the western silver price gets beaten typically during the COMEX trading hours.

This particular guilty pleading defendant, like the JP Morgan guilty precious metals manipulating trader, is cooperating with ongoing investigations by the US Department of Justice.

If you are a potential victim in these cases, visit the US Department of Justice's website for their Fraud Section’s Victim Witness link.

Learn more about the ongoing manipulation of precious metals, commodity prices, and derivative contracts. How it is indeed encouraged and incentivized within our critical price discovery markets into the year 2020, for now.

As well know that even in heavily manipulated commodity markets, there are times in which precious metal values eventually explode to the upside (e.g., 2009 into 2011 or 1978 to the start of 1980).

The drivers to see that kind of repeat price action to the upside are setting up again in our opinion and analysis. You can still position prudent bullion allocations before that begins in earnest.

Thanks for visiting us here at SD Bullion.


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James Anderson
James Anderson
Content Director

A bullion buyer years before the 2008 Global Financial Crisis, James Anderson is a grounded precious metals researcher, content creator, and physical investment grade bullion professional. He has authored several Gold