A federal judge has put on hold, for at least six months, a civil lawsuit accusing J.P. Morgan Chase of rigging the precious metals market, citing an ongoing related criminal investigation.
Judge Paul Engelmayer’s decision came at the request of federal prosecutors in Manhattan, but only after he had repeatedly pushed them to justify the pause in civil proceedings.
Prosecutors had warned Engelmayer that their criminal probe could be harmed by a request last month by plaintiffs in the civil case to ask new questions of two ex-J. P. Morgan metals traders and the bank’s global head of base and precious metals trading.
Details of that criminal investigation of the nation’s largest bank are not known. In prosecutors’ court filings seeking the delay, the details of the probe appear in areas that are blacked out.
Prosecutors last week spoke to Engelmayer on a teleconference call that did not include the parties to the civil case.
After that call, Engelmayer issued an order last Friday in U.S. District Court in Manhattan, which said, “For the reasons stated by the Government, law enforcement interests presently counsel in favor of deferring any such reopened depositions.”
But Engelmayer also noted that “it is likely that the Court will eventually permit one or more depositions to be reopened in this case, in the interests of justice.”
He told prosecutors to update him by May 30 on the progress of the criminal investigation, and to tell if they want a further postponement of the civil case.
Neither the plaintiffs in the lawsuit nor J.P. Morgan opposed the postponement.
The criminal case became public early in November when a plea agreement made with John Edmonds, a 36-year old former J.P. Morgan metals trader, was unsealed in the U.S. District Court in Connecticut. Edmonds pleaded guilty to conspiracy and commodities fraud.
Edmonds admitted during his guilty plea that he — and other “unnamed co-conspirators” at the bank — fraudulently manipulated the precious metals markets from 2009 to 2015.
The Brooklyn, New York, resident said he had learned the illegal trading tactics from senior traders, and then used them hundreds of times with the knowledge of and consent of his immediate supervisors.
When he announced Edmonds’s guilty plea, U.S. Attorney for Connecticut John Durham said, “The investigation of deceptive trading practices by others involved in this scheme is ongoing.”
The plea drew the attention of David Kovel, the attorney representing the plaintiffs in the civil case against the bank.