“Tell Gregg to wake up!” On January 18, 2012, a disgruntled hedge fund approached Jeffrey Ruffo, JP Morgan’s star salesman in charge of hedge fund clients. He is selling 93,200 ounces of gold at a price that does not satisfy him, because it is too low. Gregg Smith, the star trader of the American bank, comes into play. The operator, who clicks faster than his shadow, enters a flurry of buy orders, then quickly canceled. Objective ? Make the market believe that there is a buying trend. Stakeholders are fooled and the price goes up. The hedge fund, the bank’s client, thus benefits from a higher selling price, created both artificially and ephemerally.
Manipulating the order book by occasionally unbalancing it in one direction (buy or sell) was one of the specialties of the traders at JP Morgan, the merchants of illusions in the Chicago markets. The incessant clicks of Gregg Smith, who spent his time entering and then canceling orders at full speed, created a background noise on the desk.