“Tell Gregg to wake up!” On January 18, 2012, a disgruntled hedge fund approached Jeffrey Ruffo, JP Morgan’s star salesperson in charge of hedge fund clients. He sells 93,200 ounces of gold at a price that does not satisfy him because it is too low. Gregg Smith, the US bank’s star trader, comes into play. The trader, who clicks faster than his shadow, enters a flurry of buy orders and then quickly cancels. Goals? Make the market believe there is a buying trend. Stakeholders are fooled and the price rises. 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 balancing it in one direction (buy or sell) was one of the specialties of the traders at JP Morgan, the traders 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.