Market Manipulation Is Just a Fancy Name for Fraud

This week all eyes have been on the JP Morgan market manipulation trial, where three former employees are accused of manipulating valuable metals futures to make a boatload of money for themselves and the bank. 

While ‘market manipulation’ sounds like some complicated white collar crime, it’s really just a business term for ripping someone off. These men would create the illusion of a larger demand for something (in this case, gold, silver, and platinum) by placing buy or sell orders that they never intended to carry out, and then profiting when a buyer takes the bait at a much higher price than it’s actually worth. 

For example, imagine you’ve just inherited a significant sum of money and you’re finally looking to fulfill a dream of yours to own an apartment in your city’s downtown. You find a place you like and the seller asks for $350 thousand dollars. Initially, you’re apprehensive but after seeing a similar apartment down the hall in contract for $345 thousand dollars, another one on the other side of the building for sale at $355 thousand dollars, and the adjacent apartment just recently sold for $352 thousand dollars – you’re feeling confident that you’re receiving a fair market deal. So you buy the apartment. 

However, just after moving in you learn that the other three prices you used to compare your purchase were all from the same guy who sold you your apartment, bidding on those other three apartments, and then canceling the sales just before they went through. And even worse, you also find out that no one has ever paid more than $310 thousand dollars for any of the apartments in the building before. 

Feel like you’ve been defrauded? Well, that’s essentially what market manipulation is. 

The traders who are currently accused of market manipulation in the JP Morgan trial have claimed the defense that everyone does this. They say it’s a normal practice for them and people in their field. 

Maybe that’s a reasonable excuse when it’s explained by a thousand-dollar-per-hour lawyer who can spin this story to make the traders wearing their fancy Armani suits and moving hundreds of millions of dollars around for hedge fund managers seem like innocent bystanders. But the truth of the matter is that they tricked investors on false pretenses to make purchases that they never would have made had there been no fake trades. 

Our country doesn’t have a great track record when it comes to holding white collar, financial criminals accountable for the crimes they commit. Millions of Americans are still waiting for the companies who helped orchestrate the 2008 financial crash receive any punishment at all, while in New York alone, there are hundreds of working people who are sitting in jail for dodging the three dollar fare for the subway train. The inequity surrounding who gets punished for breaking the rules in this country remains one of the most egregious aspects of our nation’s inequality crisis. 

It’s still early in the case and we do not know how the twelve jurors in the courthouse in Illinois are going to decide, but it seems clear that in the mind of these lawyers, their wealthy bond trader clients live by a different set of rules than most Americans. 

At the end of the day, we all play by the same rules. No one should be able to avoid punishment based on how much their lawyer is paid or how many mega yachts they own. 

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