Silver Price Manipulation 

Jordan, Christopher - Vol. 1 

9/15/2010 9:15 AM 
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In the Matter c=: 

SILVER PRICES. 

: Vclume 1 

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Washington, D.C. 

\riiednesday, Septerr.ber 15, 2010 

Testimony of 

CHRISTOPHER T. JORDAK 

a witness, called fer examination by counsel for 

Commodity Futuc:-es Trading Corr.mission, pursuant to 

notice and agreerr.ent of counsel, beginning at 

approximately 9:15 a.m., at the offices of the 

Commodity Futuc:-es Trading Corr.mission, 1155 21st 

Stc:-eet, NW., Washington, D.C., before Denise 

Dobner Vickery c:= Andec:-son Couc:-t Reporting, notary 

public in and fer tr.e Distc:-ict c:= Columbia, when 

we~e p~esent on behalf a:= tte parties: 

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APPEARANCES: 

On behalf c:= Ccrr.modity Futures Trading 

Commission: 

EUGEKE SMITH, ESQUIRE 

CHRISTINE M. RYA::..,L, ESQUIRE 

JOAN MAN::..,EY, DEPUTY DIRECTOR 

PATRICIA GOMERSA::..,L, Senior Investigato~ 

JEREMY J. CUSIMANO, Advisoc:- to Directoc:­

MICEAEL A. PEKICK, Senior Economist 

JORDOK GRIMM, Surveillance Econcrr.ist 

RUSSELL BATTAGLIA, Econcrr.ist 

Division of Enforcement 

Commodity Futuc:-es Trading Corr.mission 

1155 21st Street, NW. 

Wastington, D.C. 20581 

(202) 418-5318 

On behal::: of Witness: 

JAMES J. BENJAMIK, JR., ESQUIRE 

CHRISTOPHER M. EGLESOK, ESQUIRE 

Akin Gump Strauss Haue~ & Feld, ::..,1p 

One Bryant Park 

New Yo~k, New Yark 10036 

(212) 872-1000 

On behal::: of J.P. Margan: 

wr1::..,rAM SCEROEDER, ESQUIRE 

DAVID M. so1::..,0RS, ESQUIRE 

Sullivan & Cromwell, LLP 

125 Broad Street 

New Yo~k, New Yark 10004-2498 

(212) 558-4721 

Also P~esent: 

GLENK EOFFERBER, CME Group 

* * * * * 

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CONTENTS 

EXAMINATION BY: PAGE 

Counsel =a~ CFTC 4 

JORDAK EXHIBITS: 

No. 1 - Subpoena 6 

No. 2 - Docurr.ent, Bates Stamped No. 236 

JPM-AG 00271889 

No. 3 - Octcbe~ 16, 2009, E-rrail 240 

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P R O C E E D I N G S 

MS. RYA::..,1: Okay. We' 11 go en tr.e 

record and could you please put the witness under 

oatr .. 

\riihereupcn, 

CHRISTOPHER T. JORDAK 

was called as a witness, and having been first 

duly swcrn, was examined and testified as fellows: 

EXAMINATION BY COUNSEL FOR THE COMMODITY 

FUTURES TRADING COMMISSION 

BY MS. RYAL::..,: 

Q Could you state and spell your narr.e for 

the record? 

A Christopr.er Thomas Jordan. 

C-h-r-i-s-t-o-p-h-e-r. T-h-c-m-a-s. 

J-o-r-d-a-n. 

Q This is an investigation by the United 

States Commodity Futures Tc:-ading Comrr.ission intc 

the rratter a:= In re: Silve~ Prices to dete~mine 

whethec:- there have been violations a:= certain 

provisions a:= tr.e Ccrr.modity Excr.ange Act and 

regulations. However, tte facts developed in this 

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investigation might constitute violations of otter 

:=ederal or state civil er criminal laws. 

My name is Ch~istine Ryall and I'm an 

officec:- of the Commission fer purposes a:= tr.is 

proceeding. \riiitr. me today I have otr.er CFTC 

staf:::, and I will let ttem identify themselves and 

their position. 

MS. GOMERSA::..,L: Trish Gcrr.ec:-sall, senioc:-

investigator. 

MR. SMITH: Eugene Srritt, atto~ney with 

the Division of Enforcement. 

MR. PENICK: Michael Penick, senioc:-

economist from the o:::fice of the Chief Econcrrist. 

MR. BATTAGLIA: Chc:-is Battaglia, 

Division of Enforcement. 

MR. GRIMM: Joc:-dan Grimm. I 'rr. an 

economist in the Division of Mar:,et Oversigr.t. 

MR. CUSIMANO: Jeremy Cusimano, economic 

adviso~ to the Direct~ of the Division of 

Enforcement. 

MS. MAN::..,EY: Joan Manley, atto~ney with 

the Division of Enforcement. 

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1 BY MS. RYALL: 

2 Q And, Mr. Jordan, are you repc:-esented by 

3 counsel today? 

4 A Yes, I am. 

5 MS. RYAL::..,: o:.:;:ay. And I' 11 have you 

6 introduce yourselves. 

7 MR. BENJAMIN: Thank you. Jirr. Ben~amin 

8 and Chc:-istophec:- Egleson :=rom Akin Gurr.p Strauss 

9 Hauer & Feld, One Bryant Par:,, New York, Kew Yor:,, 

10 appearing on betalf of Mr. Jordan. 

11 MR. SCEROEDER: William E. Schc:-ceder and 

12 David Sellars from Sullivan & Cromwell L::..,P, 

13 appearing on betalf of JP Morgan. 

14 (Jordan Exhibit No. 1 was rr.ac:-ked 

15 for identification.) 

16 BY MS. RYAL::..,: 

1 7 Q Mr. Jordan, you' re appearing hec:-e 

18 voluntarily today? 

19 MR. BENJAMIN: (Nodding} 

20 THE WITNESS: Yes. 

21 BY MS. RYAL::..,: 

22 Q Thank you. And I have placed -

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A He's good. 

Q I have placed before you what has been 

rr.ac:-ked as Exhibit 1. Have ycu had a chance to 

review that? 

A I sure have. 

Q And r.ave you seen it before today? 

A Yes, I have. 

Q o:,ay. And did you read over it? 

A Yes, I did. 

Q Do ycu have any questions abcut that 

docurr.ent and what's stated in tr.ere? 

A I do not. 

Q o:,ay. Thank you. Do you understand 

that you're under oath? 

A Yes, I de. 

Q And you understand tr.at you' re sweac:-ing 

that all of your answe~s a~e t~ue and correct? 

A Yes, I de. 

QI~ at any time I ask you a question you 

don't undec:-stand, will you let me know? 

A I will. 

QI~ at any time you ~ealize a previous 

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1 answer is incomplete oc:- incorrect, will you let rr.e 

2 knew? 

3 Aiwill. 

4 Q Is ttere any reason that you can't give 

5 complete clear and ccrr.plete answers today? 

6 A No. 

7 QI plan tc b~eak probably in, I dcn't 

8 :,now, two hcurs. Is there anything you need rigr.t 

9 now before we start? 

10 A No. 

11 Q O~ay. If you want to go c:=f the record, 

12 let rr.e know and I will instruct the court 

13 reporter. 

14 A Thank you. 

15 Q So first thing I want to do is just kind 

16 of go into a little bit of youc:- background. 

1 7 Have ycu ever testi:=ied before in any 

18 criminal o~ civil matter? 

19 A No. 

2 0 Q Eave you ever been a defendant in any 

21 litigation? 

22 A No. 

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Q Have you eve~ been convicted  = or pled 

no contest to a crime? 

A No. 

Q Wtat is your date of birtt? 

A l(b)(6) (b)(7)(C) I 

MR. BENJAMIN: Just i= I can ask a 

clarifying question. 

Have you ever testified in any 

regulatory investigations be:=oc:-e? 

THE WITNESS: I've given testimony ta 

the CFTC, but I wasn't -

BY MS. RYALL: 

Q Okay. And when was that? 

A I believe it was 2002. 

Q Okay. And what was the mattec:-? 

A It involved geld and silver trading on 

the COMEX. There was an inquic:-y into a cross 

trade tr.at my broker executed, and I went tc Kew 

Yoc:-k with Margan Stanley's lawyer. That's wr.en I 

woc:-ked with Moc:-gan Stanley and I was there for a 

:=ew hours, but I'm not sure exactly what they were 

investigating. 

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1 Q Ot, and ttat was in 2002 you said? 

2 A I believe so. I do c:-ecall that l(b)(6) _ 

3 b)(6) (b)(7)(C) So I 

4 thin~ it was the end of 2002. 

5 Q And you said that was about cross 

6 trades? 

7 A Tr.at was the open out -- that was when 

8 COMEX was all -- wr.en trading was all open outcry 

9 and rr.y broker, Millenniurr., l(b)(6) (b)(7)(C) I, I gave a 

10 buy order of a large amount and he gave a sell -and 

11 he r.ad a sell ordec:- apparently and it was 

12 crossed. He crossed the trade in the pit, and 

13 they asked me in reference to tr.at trade. 

14 Q Were you ever charged with any violation 

15 of law as a result? 

16 A I was not. 

1 7 Q o:,ay. Do you ,(now whether your broker 

18 was charged witt any violation c~ law? 

19 A I don't. 

20 Q o:,ay. Let's go back. \riihat is your date 

21 of birtr.? 

22 A fb1(6) (b)(7)(C) 1. 

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Q And wr.at is tr.e last fouc:- did digits c:= 

your Social Security numbec:-? 

A :b)(6) 

"h1/71W.1 

Q And do ycu have a personal e-rr.ail 

address? 

A I sure de. It's -- actually it's rr.y 

:b)(6) , but it, 3 Ll(b_l(_Bl_(b_l(_71_(c_1 _________ JI · "h1/71W.1 

Q And do ycu use ttat e-mail address? 

A Presently, yes, I do. 

Q o:,ay. 

MR. BENJAMIN: Do ycu have any ether 

pe~sonal e-mail addresses? 

THE WITNESS: I set up one for mysel::: a 

year age, but I haven't used it. So I don't even 

remerr.ber what tr.e narr.e is on it. 

MR. BENJAMIN: o:,ay. 

BY MS. RYAL::..,: 

Q So tte e-rrail address you p~irra~ily use 

is rb)(6) (b)(7)(C) 

A Cor~ect. 

Q And what about your personal telephone 

numbers, home and cell? 

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A Sure. My r.ome phone nurr.ber is Lfb_l(~6)~_ -~I 

fbl(6) (b)(7)(C) 1· My cell pr.one is l(b)(6) (b)(7)(C) I. And 

rr.y wife's cell phone, wr.ich I happen to have a 

lot, is fbJ(6) (b)(7)(C) 1-

Q o:,ay. And what is your c:-esidential 

address? 

A It 's (b)(6) (b)(7)(C) 

b)(6) (b)(7)(C) 

(b)(6) Q /h1/71W.1 ? 

AO, yes. 

Q Did ycu discuss ycur coming here for 

testimony with anyone ether than ycur attorneys? 

A Yes. 

Q wr.o did ycu discuss it with? 

A My parents and my wife. 

Q Okay. And what was the substance c:= 

that conversation? 

MS. MANLEY: \riiitr. your parents. 

BY MS. RYALL: 

Q With your parents. 

A I expressed tr.at I was asked to ccrr.e and 

spea:.:;: tc the CFTC about something gcing on with JP 

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1 Moc:-gan. I spent a mcnth or so preparing witr. Jim 

2 and Chc:-is. A:=ter I would pc:-epac:-e with tr.em, I'd 

3 oftentimes drive to rr.y parents' house and explain 

4 how it went and what I was thinking, and generally 

5 I expressed that I was nervous but that I knew in 

6 rr.y r.eac:-t that I did notr.ing wrong. 

7 Q o:,ay. Does either of your parents have 

8 a trading background? 

9 A No. 

10 Q Did you discuss it with anyone else 

11 besides your wife and parents? 

12 A I did not. 

13 Q And did you review any documents today 

14 in preparation for testirr.ony? 

15 A Yes, I did. 

16 Q Okay. And what were tr.ose docurr.ents? 

1 7 A Tf'.ey were docurr.ents provided to me by 

18 Jim Benjamin and Ctris Egleson. E-mail, Bloomberg 

19 Chats tr.at were provided to rr.e, and some tc:-ading 

20 data of cec:-tain days' trading. Eow I bought and 

21 sold througtout the day. 

22 Q The IMs that you reviewed, were those 

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1 your personal IMs? 

2 A They we--::e -- yes, when I woc:-ked at JP 

3 Moc:-gan, they were IMs tr.at I had. 

4 Q o:,ay. And you said ycu c:-eviewed some 

5 trading information related to you--:: trading at JP 

6 Moc:-gan? 

7 A Yes. 

8 Q wr.at form is that in? 

9 A Well, rb)(7)(C) I did b)(4l 

~-----------" 

1 0 (b)(4) 

11 

12 b)(4) 

13 b)(4) 

14 b)(4) 

15 fb)(4) I 

16 Q And those tc:-ading days tr.at you were 

17 reviewing, were they related to the IMs that you 

18 reviewed? 

19 A Yes. 

20 Q Okay. So it was tr.e sarr.e days? 

21 A Sarre days. 

22 Q Okay. And did you have tc:-ading data fer 

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all of the IMs that you reviewed? 

A I'm not sure. 

Q O~ay. Could you tell us about your 

educational background sta~ting witt college? 

A Sure. I -- I went to the University a:= 

Vi~ginia in 1990. I spent four yea~s. 

Q Is tr.at when you graduated? 

A No. I started there in 1990. 

Q o:,ay. 

A I g~aduated in 1994. 

Q o:,ay. 

A With a -- oc:- witr. an MA in economics and 

that's -- ttat's it. 

Q o:,ay. And let's see. \riihat did you do 

after graduating? 

A Right after graduation, I secured a job 

witr. the Republic National Bank of New York. I 

was a surr.mer intern there prioc:- to my senior year 

in college, and I was as~ed to join the rranagement 

training pc:-cgram of Republic Kational Bank a:= New 

Yo~k. I spent a year in the training p~cgram o~ 

so, and then I secured a positicn on the p~ecious 

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1 rr.etals trading desk. 

2 Q And was the management training program 

3 :=ocused on any particular sub~ect matter oc:- group? 

4 A Generally, as I remembec:- it, the 

5 rr.anagement training program was -- the people tr.at 

6 we--::e selected were generally sons or daughters a:= 

7 ve--::y wealthy individuals to rb)(7)(C) 1-­ tr.at knew 

8 "b-)(~7)-(C~)--------------=:::;---I~wcrked in the 

9 dec:-ivative products group my senioc:- year and did a 

10 good ~ob, and tr.ey c:=fered me tc ~oin tr.at 

11 program. 

12 So I was one of the few that didn't 

13 really r.ave, you knew, an "in" thec:-e, but wr.at the 

14 training pc:-cgram was, was every thc:-ee months oc:-

15 six rronths -- and I don't --::ecall exactly the time 

16 -- you switched :=rom des~ ta des~. 

1 7 So I started on the consumer banking 

18 side, wr.ich was actually like just the bank side 

19 of it, and then I get up to the trading :=locr tc 

20 the treasuc:-y des:,, whicr. was asset and liability 

21 rr.anagement. And when I was up on the tc:-ading 

22 desk, tr.at' s when I saw the precious metals group 

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going nuts cne day, and I approached therr. tc see 

if I could secure a job there. 

Q o:,ay. And did you do any trading in the 

training p~cgram? 

A No. 

Q No? 

A I did not. 

Q So afte~ one year, ycu mcved intc 

precious metals trading, and what did ycu de there 

at the beginning? 

A Trying tc remember wr.at I did. At first 

I c:-err.ember appc:-caching the boss of the group, tr.e 

two bosses, l(b)(7J(C) I and l(bl(7J(C) I, and I 

just told ttem I really wanted to be a trader at 

some point in my life. At first I started of:: in 

ve~y menial tasks, like ripping off telexes and 

writing confirmations tc clients and more li:,e 

rr.iddle back office type duties, but ultirr.ately 

wittin, like, less than a year I secured a job as 

the assistant tc IL(b_l(_71_(C_I ____ ~ who was the silver 

trader. 

And Republic, you know, had a very big 

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1 precious metals desk. Sc I was -- ttat's really 

2 where I learned how to trade. I didn't really 

3 understand it be=o--::e then. 

4 So I spent a few months with l(bl(7J(C) I as 

5 the assistant silver t--::ade--:: and then, as I recall 

6 it, the gold tc:-adec:-, a fellow narr.ed fbl(7J(C) I, ~-----~ 

7 went on vacation for twc wee:.zs, and they they 

8 offered rr.e the responsibility of being the gold 

9 dealer for those twc wee:.:;:s. And as I remember, I 

10 did ve--::y well tr.ose two weeks, and I was pc:-crr.oted 

11 to chief gold dealer. 

12 Q Ovec:- f~b-)(7_1(_C_I ---~I? 

13 A Yes. It sucked because it was my best 

14 :=riend, to be honest with ycu, and it was very -it 

15 was a very ttat was part of my motivation to 

16 to leave that place. 

1 7 Q And so wr.en you said you learned to 

18 trade on that precicus metals desk, was that fc:-crr. 

19 fb)(7)(C) 

20 A tb)(7)(C) I was the rr.ain -- the rr.ain 

21 pec:-son who wr.o sr.owed me how to, you ,(now, hew 

22 the rr.ac:-kets woc:-ked and r.ow EFPs woc:-ked and r.ow to 

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quote customers and how to generally attain a 

:=eeling about wr.ere the rr.ac:-ket is genec:-ally 

heading. So I kind c:= -- he :,ind of wrote my 

beginning playbcok, I guess I could say. 

Q What :<ind of business did they de at 

that des:,? 

A They we--::e -- they were -- at that time, 

as I recall it, they were very big with -- with 

every ccrr.munity that I can name. The hedge fund 

community, the producec:-s, middle tier banks, 

Middle East. They had a ve--::y big Middle Eastern 

:=allowing. So as I recall it, sitting next to 

rb)(7)(C) I, r.e was ma:,ing pc:-ices ve--::y actively 

thc:-cughcut the day, and rr.y responsibility was tc 

get them wc:-itten down and his -- and what he'd 

basically de is say, 'CJ, wr.at's my position? 

Tell me rr.y position. 

So I'd have to add up tis buys and sells 

on the futures and tis buys and sells in spat, and 

I'd say, 'Ycu'c:-e long tr.is much. You're short 

this much.' But that's really wr.ere I developed 

a sense of let's figure out where tr.e market may 

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be r.eading. 

Q And r.ow did you do tr.at from watching 

him rrake p--::ices? 

A Ee was -- as I c:-ecall it, he was ve--::y 

active and tis main rrentality was ta be super 

aggressive to see client flew. As I remerr.ber it, 

he would -- he would oftentirres lose on a customer 

deal, break even. He ~ust wanted to see the order 

:=low, and he was more of like a :=low tc:-adec:-, as I 

remerr.ber it. Like if he saw a let of buyers and 

sellers or a lot of buyers coming in, he would 

generally be long. A lot of sellers, he'd 

generally be short. 

But he also handed rr.e to watching the 

charts and technical things, such as t--::end lines, 

rr.oving avec:-ages, stcchastics, tr.ings that every, 

you ,(now, mast traders r.ave on their des:< in fc:-cnt 

of them. 

At ce~tain times if things lined up, I 

noticed that that was -- his gut. If the 

tectnical ttings lined up and tte orde~ =iow lined 

up, that's when he'd tend ta have his biggest 

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positions from what I -- I saw and that's kind a:= 

how I tried to fashion my own style. 

Q You say r.e's super aggressive to see 

client flow. How do you rr.ean he was super 

aggressive? 

A I -- it's -- that is a tough question. 

I'd say a let of deale~s have client flew 

regardless a:= hew aggressive they are. They just 

rr.ake a bid and c:=fer. It's very wide, but his 

rr.entality was, '\riie want to capture this client 

:=low. Sc we're going to rr.ake the tightest price 

out there. We'~e going to be super agg~essive. 

\riie're net tao concerned if we ma:,e er lase en tr.at 

individual deal, but net net the more business you 

see, the bette~ you'll do.' 

And that's :,ind the whale agenda tr.at I 

thought that they put in place. 

Q So wten you say client flow, are those 

clients that the ban:< already had tr.at are coming 

in to ttem for to be a counterparty? 

A Both. 

Q o:.:;:ay. 

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A Clients tr.at they alc:-eady had and 

clients that tr.ey were trying to entice to trade 

wi tr. therr .. 

Q So tr.ey tried to rr.ake the best price to 

get people to ccrr.e to tr.em? 

A Bette mcst agg--::essive. Make the best 

price. Be tr.e fastest price and that way clients 

will remember ycu and ccrr.e back to you. 

Q O~ay. You said also working en ttat 

desk at the time was fbJ(7)(C) I? 

~-------~ 

A Yes. 

Q Okay. And what was he doing tr.en? 

A As I recall it, !2?)(7Jq and rb)(7)(C) I we--::e the 

twc senioc:- traders on the group. rb)(7)(C) I ran 

basically tr.e spot side of it, as I remerr.ber, and 

~ ran the :=oc:-wards, tr.e forward beak. 

Overseeing it all was a gentleman narr.ed (bl(7J(C) 

rb)(7)(C) I, who was, you knew, the global head c::: 

rr.etals, the forward side of 

it and I remember hearing tr.at r.e'd come fc:-crr. tr.e 

Citibank vault and that's -- and that was his jcb 

rigtt be:=oc:-e he joined Republic. 

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Q Did ycu wcrk with him -A 

Yes. 

Q -- at that ban:,? And what did you do 

:::oc:- him? 

A I didn't -- I didn't tave any 

responsibility under hirr .. 

Q Did you get involved in tis trading at 

all? 

A No. 

Q So hew lcng was it be:=oc:-e you toe:< over 

that gold desk? 

A I believe it was -- I g~aduated in 1994. 

I den' t :,now the exact date. I know I started at 

Mo~gan Stanley in June a:= '96. So it was -- it 

was around a year and a half. I thin~ I had the 

gold ~ob for about three to six rronths and that's 

that was when I left. 

Q And what did that ~ob comprise? 

A That job comprised it was twofold. 

It was making markets tc clients and taking risk 

on behal::: of Republic's account. 

Q And appc:-cximately how much of each was 

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your positions er ycur book? 

A That's a difficult question. Thin:<ing 

back, ycu know, that's a hard tr.ing to answer 

because they' re :,ind of ve--::y intertwined and 

connected. Even if I had a srrall position, 

oftentimes it was tc give liquidity to a client. 

But I know my main focus at that point was always 

:,nowing where tr.e market was so I can ma:,e a quick 

sharp price, and obviously I was a young kid. 

So I wasn't taking too rr.ucr. ris:,, but to 

give a percentage-wise a:= wr.ich was which, I don't 

:,now. But I would assume making rr.ac:-kets was rr.oc:-e 

of a p--::iority ttan trading my own position. 

Q Were you trading spot o--:: :=o--::wards o--:: 

:=utures? 

A Spot and futures. 

MR. BENJAMIN: Did ycu trade options 

bac~ tten? 

THE WITNESS: Ne. 

BY MS. RYAL::..,: 

Q And you said you we--::e there three to six 

rr.onths. \riihat happened tr.at caused ycu tc leave? 

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A As I -- as I remembec:- it, you ,(now, 

obviously I think I stated in my testimony ea~lie~ 

that my best fc:-iend on the desk was fb_l(_7_)(C_l ____ ~I, 0

and so that was ~ind of a di~ficult situation 

where tr.ey promoted rr.e eve~ him, but in general I 

recall Morgan Stanley approached me and offered rr.e 

almost double tte money to come there and trade as 

their cr.ief silver dealer. And as I remerr.ber it, 

it wasn't even debatable. It was a great 

opportunity. 

Q Eow did it ccrr.e about that tr.ey 

approacf'.ed you? 

A A guy named f~b_)(7_1(_C_I ---~I --l(b)(7)(C) 

fb1(7)(C) lis his exact name was their geld trader 

at that time. Tf'.ey r.ad a silvec:- trader, as I 

remerr.ber it, named l(b)(7)(C) I and apparently 

their silver business didn't, as he described it 

as I recall, didn't have toe much of a presence in 

the rr.ac:-ket, and Republic always had a big presence 

in silver because of Scctt. 

So I guess the best way to describe it 

is it was a vec:-y small community of, like, eight 

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1 or so dealers or ban:.:;:s that :,new each othec:-, and I 

2 was a young ~id that they knew and they just 

3 approacf'.ed me tc take tr.at job. sofbl(7)(C) 

4 approacted me. We went cut a few times and 

5 ultirrately I did a series of interviews witt his 

6 bosses and secured an oppo--::tunity ttere. 

7 Q When you said they didn't have a big 

8 presence in silver, what does tr.at mean? 

9 A I'd just say that Republic was very -and 

10 I used the word loosely ea--::lie--:: -- Republic 

11 was ve--::y aggressive in trying ta b--::ing in clients, 

12 and they saw a lot more business in the silver 

13 rr.ac:-ket. So as I was told, tr.is girl rb)(7)(C) I was not 

14 ve--::y aggressive and clients we--::e upset with the 

15 silver pricing. So that's wtat I was told, that's 

16 what I remembec:-, and they wanted somebody tc step 

1 7 in thec:-e and -- and really make -- make sharp 

18 aggressive prices. 

7 19 Q You said jtb_l_(_1(_c_1 ____ ~lwas your best 0 

20 =riend en tte desk at Republic. Did you did 

21 you have a friendship with Mr. rb)(7J(C) 

22 A I would say no. 

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Q Did you ever socialize with hirr? 

A Only in the setting  =, like, the des:< 

going out fer, like, dinnec:- or something like 

that. 

Q o:,ay. So you left and went tc Morgan 

Stanley in June of 1996? 

A Yes. 

Q o:,ay. And how long were you thec:-e? 

A I was there for 10 years. 

Q And so ycu started out as the chief 

silver trader? 

A Yes, in the New York time zone. 

Q And so wtat were you doing in that 

position? 

A Again, my ~ob was twc:=old. I recall my 

:=ic:-st prioc:-ity was to always knew wr.ere the rr.ac:-ket 

is so you can ma~e agg~essive prices, and as I 

remerr.ber therr. saying, 'We want you to build ouc:-

presence in this mar:,et,' wr.ich is bring customers 

in the dooc:- by being a shac:-p, quick pricer a:= spot 

silver. So that was one aspect. 

The otter aspect was trading, again, on 

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behalf c:= Mcrgan Stanley's account. 

MR. SMITH: \riihen you say tc:-ading on 

behalf c:= Morgan Stanley's account, do you mean 

prop t~ading? 

THE WITNESS: It's kind of a loose term. 

I would say you're taking ~isk. You could ta~e a 

view for a week or a day oc:- intraday, but I guess 

it could all be described as p~cp trading. I'm 

not su~e of the exact de:=inition of it but -

MR. BENJAMIN: But ycu mean you were 

trading wi tr. Morgan Stanley's capital? 

THE WITNESS: With Morgan Stanley's 

capital. 

BY MS. RYAL::..,: 

Q And in ttat position, at the beginning 

how rr.ucr. of your business was client versus the 

prop t~ading? 

A See, again, I think that's very 

difficult because tr.ey' re very connected. Li:,e, 

:=ic:-st of all, my main tr.ing was to know where tr.e 

rr.ac:-ket is all day. You've get te knew because at 

any time somebody can as:, yeu a question. 'Give 

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rre a p--::ice en a rrillion ounces' or something. Sc 

you got to know that. Sc you're on top a:= tte 

rr.ac:-ket all day but with that, ycu genec:-ally have a 

view and a position, small er medium size or large 

and, you knew, one really feeds off the other. 

You knew, i:= I 'rr. long and a customer 

asks for a price, I'rr gene--::ally going ta be a 

better c:=fer because I want him to buy from rr.e 

just so I can, you know, keep my position tight. 

So I don't think there's a percentage I could use 

to define tr.at. I tr.ink they're ve--::y 

interconnected. 

Q What we--::e you tc:-ading there? 

A At Margan Stanley? As I recall it, fer 

the :=i--::st ttree to six montts -- three to six 

years, rather, three to :=ive years, :=ic:-st tr.ree 

years was just silver. Straight silver. 

Somewhere -

MR. BENJAMIN: wr.en you say straight 

silver, you rr.ean what? 

THE WITNESS: Futuc:-es and -- futures and 

spot silvec:-. 

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BY MS. RYALL: 

Q Opticns? 

A I did not trade options. 

MR. BENJAMIN: In that tirr.e period? 

THE \riiITNESS: In that time period. New, 

at some point and I don't ~ecall the dates at 

all -- Ll(b_l(_71_(c_1 ___ ~I, l(bJ(7J(CJ I, the guy 

that met with me to bring me over, r.e had le:=t to 

go to, like, a r.edge fund or something er Serr.pc:-a I 

believe he went to. I took tis job -- his 

responsibilities as well as rr.y awn. 

So now somewhere between tr.ree and :=ive 

years, I was not only tr.e silver tc:-adec:-, I was the 

gold and silvec:- trader and that's wr.ere I started 

trading gold and silve~ spot and futures. And 

then towards the end of rr.y tenure, the last thc:-ee 

or fouc:- years, I started tc:-ading a little mere 

proprietarily in some othe~ instruments like 

=o~eign exctange. 

I may er may net -- I may r.ave traded 

some energy, but it was all rro~e of, like, en a 

proprietary basis, but ultimately my main fecus 

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= --:: those 10 years was silver, then silver and 

gold. 

BY MS. RYAL::..,: 

Q And it was always spct and futuc:-es? 

A Spot and =utures. I did trade options 

toward -- I did trade geld and silver options my 

last few years. After I becarr.e the chief dealec:-. 

Q Did you eve-:: trade forwards? 

A I don't -- I never --::an a = --::ward book, 

but there were times -- oh, I did -- I did run the 

silver forward book rr.y first couple years, but it 

was a very sir.all boc:,, as I remerr.ber it. But I 

would ma.<e markets i:= a customer -- there was a 

:=  --::ward trader at Morgan Stanley that --::an a 

:=  --::ward book, but if a custcrr.ec:- wanted to match up 

a date er --::ell cut a t--::ade for, like, one week to 

one rronth, I would just rrake the p--::ice because, 

you ~now, tte P&~ was pretty inconsequential. 

So short-term forwards I wculd rr.ake 

rra~kets, as I ~ecall, from time to time, but 

generally I ran no forward book or no forward 

position. 

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Q And ycu said that your main fccus, your 

rrain ~ob was to ~now where the market is all day? 

A My main job was to -- to rr.ake money and 

to give good p--::icing to clients. 

Q o:,ay. So you we--::e focusing on where the 

rr.ac:-ket was to try tc make gcod pricing? 

A Yeah, and to :,ind of :,now where -- well, 

to develop an opinion wr.ere the rr.ac:-ket is gcing, 

but always the main priority was to ~now where it 

is. So, you ~now, back then, as I --::ecall, 

customers were very active. So you r.ad to be 

ready tc make a price. You know, you could be 

walking into the bathrocrr. and scrr.ebcdy would ask 

you :=oc:- 2 million ounces. Yau had tc knew wr.ere 

it is. So -Q 

How did you ,(now where it was? What did 

you do? 

A As I remembec:-, bac:.:;: tr.en it was open 

outcry. It was the COMEX, pits. I had two 

b~c~e~s in silver. Two brokers in gold. As I 

remerr.ber, tr.ey were on the apposite sides of the 

pit, and I r.ad fou~ spea:,e~ boxes on my desk 

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1 constantly. And they're and, you knew, thec:-e was 

2 a clerk and a broker and the clerk's ~ob was to 

3 constantly quote the mar:,et. 30 bit of 40, 30 bit 

4 of 40, 40 bit of hal:::, r.alf stc:-aight, 60 bit of 

5 70, and that's all day. 

6 So even if I was on the otr.er side of 

7 the pit, I would knew wr.ere the rr.ac:-k -- I mean, 

8 even if I was walking or taL(ed to my bcss, I 

9 would always knew wr.ere it was. 

10 MR. BENJAMIN: You said the other side. 

11 You rr.ean the otr.er side of the trading floor? 

12 THE WITNESS: Tte othe~ side of the 

13 trading :=locr. I mean, it was lcud speakers in 

14 your face be:=oc:-e it went -- becarr.e electronic. 

15 BY MS. RYAL::..,: 

16 Q You mean Moc:-gan Stanley's tc:-ading flcor? 

1 7 A Yes. 

18 Q o:,ay. So it was en tr.e open outcry bcx 

19 or it was bcxes you could hear? 

20 A It was on boxes. ::..,ike it was, like, 

21 anncying. It was like people ~ust, yeah, it was 

22 constantly pricing from 820 to 120 er wr.atever it 

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1 was. 

2 Q o:,ay. And so what -- how did you end up 

3 leaving Moc:-gan Stanley? 

4 A As I remerr.ber it, I left Moc:-gan Stanley 

5 in 200 -- ~ight after tte end of 2005. Well, 

6 after my bonus. Ea~ly 2006. In 2005 I was 

7 approacted by JP Morgan to join their group and at 

8 the same time, Morgan Stanley was ttinking about 

9 rroving their t~ading -- their metals t~ade~s to 

1 O ::..,ondon. So that's wr.y I left. I didn't want to 

11 go to Lendon with my family. 

12 Q Did anyone ttat you worked with at 

13 Moc:-gan Stanley also woc:-k at Republic with ycu? 

14 A No, I don't believe so. 

15 Q o:,ay. And whc approached you :=rom JP 

16 Mo~gan to join their g~cup? 

17 A A gentleman named Lrb_l(_7

_l(C_I ___ J1. He woc:-ked 

18 wi tr. me at (b)(7)(C) 

~--------------------~ 

19 years. Ee was rb)(7)(C) I while I was en tr.e 

20 spot side of the business, and r.e rLb-1(_71_(c_1 ____ ~ 

21 (b)(7)(C) 

22 (b)(7)(C) 

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1 l(b)(7)(C) I· 

~---------~ 

2 Q Ee was in Kew Yor:.:;:? 

3 A Ee was in -- I'm trying to c:-err.ember 

4 because he's been gcing back between London and 

5 New Yoc:-k. Yes, when he appc:-cached me, he was in 

6 New Yo~k. Yes. 

7 Q And r.e approached you to join the pc:-cp 

8 group? 

9 A He approached rr.e to (b)(4) 

~-------~ 

1 0 (b)(4) 

~--------------------------~ 

11 ~l(b_)(4_1 -~ 

12 Q Did ttey tave a spot trader tten? 

13 A (b)(4) 

~--------------~ 

14 (b)(4) (b)(7)(C) I believe 

15 she just gc:-aduated college. b)(4) 

~-----------~ 

b)(4) 16 

fb1(4) 17 I 

18 Q o:,ay. And was that spot in wr.ich 

19 metals? 

20 A Geld and silver. Futures and spot. 

21 Q And wr.o was ycur supervisor wr.en you 

22 went tc JP Moc:-gan? 

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1 Af~b_)(7_1(_C_I ____ J 

2 Q Did you know anyone er farriliar with 

3 anyone at JP Morgan before you went there? 

4 A I had met -- as I stated before in my 

5 testimony, it was a ve--::y small community. Sc I 

6 had IT.et fbl(7)(C) I a few tirr.es at, like, a broker 

7 :=unction oc:- something, but generally I recall just 

8 rb)(7)(C) I was my my only kind of close contact. 

9 Q And so wr.en you stac:-ted at JP Morgan, 

10 what were ycu doing in you--:: trading? You' re spot 

11 and :=utures, but what was tr.e business? 

12 A The business was, as I --::err.ember it, was 

13 it was still open outcry. I mean, that was Lrb_l(_4_1_~ 

14 b)(4) but 

15 open outcry was still tr.e way tc execute futures. 

16 b)(4) 

17 b)(4) 

18 b)(4) 

19 b)(4) 

20 MR. BENJAMIN: And were you trading 

21 precious metal options from the beginning of your 

22 tenure at JP Morgan? 

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THE \riiITNESS: I don't remember, to be 

honest. I tr.ink I did, though. (b)(4) 

~------~ 

b)(4) Sc I would 

assurr.e I did in rr.y early times at JP. 

BY MS. RYAL::..,: 

Q wr.at was you--:: title at JP Moc:-gan when 

you got there? 

A I was hired as a vice pc:-esident. 

Q Did tr.at eve-:: change while you were 

there? 

A Yes. I was pc:-crr.oted tc executive 

directer. Well, when I :=ic:-st get tr.ere, it just 

went -- b)(4) 

Q And when you went to JP Morgan, what was 

the compensation agreement? 

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1 A rb)(4) (b)(6) (b)(7)(C) 

2 b)(4) (b)(6) (b)(7)(C) 

3 (b)(4) (b)(6) (b)(7)(C) 

4 b)(4) (b)(6) (b)(7)(C) 

5 fbl(4) (b)(6) (b)(7)(C) I- ~------------" 

6 Q Eow did that compare to what you rr.ade at 

7 Moc:-gan Stanley? 

8 A b)(6) (b)(7)(C) . I 

9 thin:< my last couple years at Morgan Stanley, I 

10 rr.ade between Lrb_l(_6_1 _(b_l(_71_(c_1 _____ ~ in tf'.e last couple 

11 years. 

12 Q We'll come back to JP Morgan and talk 

13 about ttat in mere detail late~. 

14 A o:,ay. 

15 Q But when did you leave JP Morgan? 

16 A I left JP Morgan in late 2009. I 

17 believe it was middle November 2009. 

18 Q o:,ay. And what were the circurr.stances 

19 of youc:- leaving there? 

2 Q A fbJ(4) (b)(6) (b)(7)(C) 1 · 

21 Q What does that mean? 

22 A As I -- as I remerr.ber, fbl(4) (b)(6) (b)(7)(C) 

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(b)(4) (b)(6) (b)(7)(C) 

(b)(4) (b)(6) (b)(7)(C) 

(b)(4) (b)(6) (b)(7)(C) 

(b)(4) (b)(6) (b)(7)(C) 

(b)(4) (b)(6) (b)(7)(C) 

(b)(4) (b)(6) (b)(7)(C) 

(b)(4) (b)(6) (b)(7)(C) 

(b)(4) (b)(6) 

/h1/71W.1 

Q o:,ay. And what happened a:=ter you left 

JP Morgan? 

A I remember ta:,ing a few montr.s of:: just 

to, you :,now, be with my family and stuf:::, and 

then I was appc:-cached by a r.eadr.unter tr.at said 

Credit Suisse wanted to talk to rre. 

Q Uh-huh. 

A And then I spoke wi tr. therr. and secuc:-ed a 

job witr. therr. starting in March or April. I don't 

remerr.ber, but tr.ree or fouc:- rr.onths. 

Q o::: 2010? 

A 2010. 

Q Are ycu still there tcday? 

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1 Q Okay. \riihen did you leave thec:-e? 

2 A rb)(4) (b)(6) (b)(7)(C) 

3 cfb_l(_41_(_bl_(6_1_(b_l(_71_(C_l ___________ ~I -- in the summer. 

4 I dcn't -- I don't recall tte date. I ttink it 

5 was June. 

6 Q And why l(b)(4) (b)(6) (b)(7)(C) 

7 A As I remerr.ber, I was -- I was told tr.at 

8 b)(4) (b)(6) (b)(7)(C) 

9 b)(4) (b)(6) (b)(7)(C) 

10 fbJ(4) (b)(6) (b)(7)(C) I 

11 Q What was your position at Cc:-edit Suisse? 

12 A I was a direct~ and unof~icially I was 

13 basically tte ctief -- chief deale~ ~o~ gold and 

14 silver. 

15 Q What was their business in geld and 

16 silver? 

1 7 A Tf'.eic:- business. Tf'.e tr.ing I c:-err.ember 

18 abcut being hired thec:-e was that tr.ey wanted tc 

19 build a presence in these markets. So I thin~ 

20 their business was less developed ttan Morgan 

21 Stanley and JP Morgan, and I was -- I was tcld, as 

22 I c:-err.ember, that I was r.ired to come in and build 

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it up. 

Q And so wr.at did you do wr.en you got 

there? 

A b)(4) (b)(6) (b)(7)(C) 

l

(b)(4) (b)(6) (b)(7)(C) I L·---------~· I traded gold, silvec:- and I 

proprietarily traded PGMs, platinum group metals, 

I prop~ietarily traded foreign exchange, as well 

as enec:-gy. 

Q You said you proprietarily traded PGMs? 

A Yeah. 

Q You didn't have a client business in 

PGMs? 

A They had a client business but, as I 

remerr.ber, I wasn't responsible for making tr.e 

general prices to clients in that market -- those 

rr.ac:-kets. There was a guy in ::..,ondon that would 

stay during New Yoc:-k hours, but I know I made scrr.e 

prices. ::..,ike if he was not thec:-e oc:- off the desk 

or whatevec:-, but that was net undec:- rr.y urr.bc:-ella of 

responsibility. 

Q So wtat was under your ~esponsibility? 

A Gold and silver, rr.a~ket making and 

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trading on behal= of C--::edit Suisse. Again, 

twofold. 

Q And what we--::e you tc:-ading there? 

A Spot, =utures, options. 

Q Wto were you--:: spot clients? 

A Spot clients? 

Q Ttis is gene--::al categories. 

A Gene--::al? Like, I don't want ta leave 

anybody out of the list. But hedge :=unds, ether 

banks. The proprietary trading groups at  tr.er 

banks li:,e prop groups as we call tr.em. There was 

a Credit Suisse Private Bank that had clientele. 

Producer. I don't know i:= I ever did a trade for 

a producer, but that's a category ttat's, ycu 

:,now, tr.at these tc:-ading des:.:;:s market very 

aggressively. 

I don't -- I don't recall we ever did a 

producer deal, but producec:-s. Sc, li:,e, those 

would be the main categories that I thin:<. 

Q wr.at did you use the futures for thec:-e? 

A Ta~ing ris~ or hedging tc:-ansactions. 

MR. BENJAMIN: Eedging custcrr.ec:-

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1 transactions? 

2 THE WITNESS: Customer transactions. 

3 BY MS. RYALL: 

4 Q And wtat c= tte options? 

5 A Options? Generally, as I remembec:-, I 

6 tend tc use options for, li:,e, rr.y mediurr. term 

7 views. You know, where I think a mar:,et is going 

8 in the next rr.onth or three montr.s and I :,ind of 

9 try to separate that like from day-to-day, you 

10 :,now, buying on dip, selling on rally. So options 

11 I would use=~ ~ind of, let's say, rracro, even 

12 though it's usually rr.y optionality was three 

13 rr.onths, but let's say tr.ree-rr.onth type views. 

14 One- to thc:-ee-mcnth type views. 

15 Q So tr.at was youc:- proprietary trading? 

16 A That would gc on a propc:-ietary trading 

1 7 book, yes. 

18 Q And so wr.at were your ris:.:;: parametec:-s, I 

19 guess, as ycu undec:-stood therr. wr.en you got thec:-e? 

20 A That's that's really very difficult 

21 to answer. I was hired by a lady namedl(b)(7)(C) 

22 lc(b_l(_7_l(_c_1_~I, wr.o as I understocd it was -- was a 

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1 (b)(7)(C) 

2 (b)(7)(C) and I do recall during 

3 ouc:- interview process sr.e wanted me to come in and 

4 really kind of -- I remerr.ber the terrr. 'swing a big 

5 bat, build the presence' like 'let's put us on the 

6 rr.ap type thing.' That was tr.e genec:-al tr.eme. 

7 She toe:< a lot of risk, a lot more than 

8 rr.e but my -

9 Q wr.at did she trade? 

10 A sr.e traded everytf'.ing. Similar. 

11 Q Precious metals? 

12 A Precious metals. Yeah. P~ecious 

13 metals, spat, futures, options, as well as ~o~eign 

14 excr.ange, PGMs and enec:-gy. But as I remerr.ber it, 

15 rr.y parameters during my hic:-e were tc come in and 

16 take ris~ and provide great liquidity ta clients. 

1 7 Try to build the pc:-esence. That's -- that's the 

18 way that's tr.e c:-eason I joined. It sounded 

19 like a great opportunity. But in terrr.s c:= my 

20 position sizes the~e? Was ttat you~ original 

21 guest ion? 

22 Q What was your understanding c:= ycur risk 

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1 pac:-arr.eters when you got there? Did they give you 

2 anything in writing? 

3 A The problem was -- tr.ey may r.ave. I 

4 don't c:-err.ember. Honestly, I don't c:-err.ember. \riihen 

s l(b)(7)(C) 1-- li:,e when rb)(7)(C) I was thec:-e, sr.e -- she 

6 apparently -- and tr.is is -- this was tr.e c:-eason 

7 that it really didn't gc so great. I was the only 

8 guy in New York. Everybody else was in Landen. 

9 So when I first got there, I'd talk toter eve~y 

10 day and tell her what I had on. 

11 She -- she was down a lot c:= mcney, as I 

12 remerr.ber it, and apparently rb)(B) (b)(7J(C) 

~----------~ 

13 (b)(6) (b)(7)(C) and tr.en 

14 she lost a lot c:= -- a lot c:= mcney after ttat, as 

15 I was tcld. I mean, I saw her P&::..,, but I don't 

16 ~now if it's correct. 

17 She was down over -- well eve~ $20 

18 rr.illion. So I didn't report tor.er a:=ter that, 

19 but when she was there, I tcld r.er eve~y ris:, tr.at 

2 0 I had on. Everything. 

21 MR. BENJAMIN: Ll(b_l(_s1_(_bl_('_l(_c_1 _______ ~ 

22 l

(b)(6) (b)(7)(C) I 

L·-----------~' as ::a~ as you know? 

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1 THE \riiITNESS: As :::ac:- as I knew, (b)(B) (b)(7)(C) 

2 l(b)(6) (b)(7)(C) I3 BY MS. RYAL::..,: 

4 Q Was she based in ::..,ondon? 

5 A She was based in ::..,ondon. And then I 

6 didn't really have a direct report that I was tcld 

7 of, as I remember, but I was sitting near a guy 

8 named 1(b_l_(7_1(_C_l ____ ~I, 0who ran the index trading fer 

9 them. Sc my trading was pretty much the same type 

10 sizes, you know, that I've always used day-to-day 

11 but, you knew, generally I recall wr.en I get a 

12 big, big view, I take a big position. 

13 Three to five times a yea~ I ta~e a real 

14 position and, as I remembec:- it, the rr.ac:-ket dipped 

15 aggressively, ycu know, the rr.ac:-ket dipped very 

16 :=ast in gold and silve~ and platinum and 

17 palladiurr, and I toe~ a sizable position in those 

18 rr.ac:-kets. 

19 Q At tte dip or before the dip? 

20 A Scaled dcwn but generally I bougr.t tr.e 

21 dip. My average price was lcwec:- than where it was 

22 when the mar:,et started. I repc:-esented this 

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1 position. I 7 toldrbl( l(C) 1. I tcld the guys in 

2 ::..,ondon and -- and, as I remerr.ber it, the next 

3 rr.oc:-ning I carr.e in and tr.ey said, 'Ycu' c:-e way -ycu 

4 went toe big. We' re going tc liquidate youc:-

5 position.' 

6 Q When was this? 

7 A This was in -

8 Q De you remember tr.e date? 

9 A -- June. I den' t remerr.ber the date. It 

10 was in June. And I remembec:- spea:,ing t D l(b)(7)(C) I 

11 It was like -- to me it was shoc:,ing because l(b)(7)(C) 

12 said, 'Nobody has given you pac:-arr.eters. You told 

13 rr.e you took' -- I mean, this is what I remembec:-. 

14 'You told me you did this and new tr.ey want rr.e to 

15 stop you out. Just go ta:,e a couple days off.' 

16 So I went and took a couple days of~. I 

1 7 came bac:.:;: in and they said, 'We' re going to review 

18 your t~ading. Ycu'~e on leave.' And to me it 

19 was just shocking. So I was ve--::y upset about 

20 that, ycu know. I --::eally wanted that opportunity 

21 to work. 

22 Q So wtat tappened overnigtt? I mean, did 

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1 your boa~ gc into negative? 

2 A No, it didn't. I thin:< tr.e way I -- as 

3 I c:-err.ember it, the market stayed pc:-etty stable 

4 overnigr.t, and it was falling a big dip. I think 

5 it went up early overnight, as I remember. I'm 

6 not suc:-e. I thin:< it went up and then it was bac:.:;: 

7 down about whec:-e I went home with my positions. 

8 7 And the next morning I walked in and rb)( )(C) I said, 

9 'Just gc take a brea:.:;:. We' c:-e going to liquidate 

10 your positions.' 

11 And I was just, like, blindsided. I 

12 was, like, what -- you know, 'Tf'.is is exactly wr.at 

13 I told you I did.' This is a gc:-eat opportunity 

14 to tave a big position. So the exact thing that I 

15 was told whenfbl(6l (bl(7J(C) ~ that I exceeded rr.y ~---------

16 bac:- limits and I didn't listen to my -- to (bl(7J(C) 

17 l(bl(7J(C) I, who ran the group. 

18 And what I said, I said first I reported 

19 to l(bl(7J(C) I, then I c:-epoc:-ted to (bl(7J(C) I told 

2 0 everybody wr.at I was doing. You ,(now, I had 

21 several different levels of communicaticn. So, I 

22 rr.ean, it was ~ust net a good experience in 

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1 general. 

2 Q So wr.at was the big position in? 

3 A It was in gold, silver, platinum, 

4 palladiurr .. I think the ma~ority was in -- I went 

5 long silve--::. These are rougr. numbec:-s. I believe 

6 I went long 2 tc 3 million ounces silver and I 

7 went long platinum, palladiurr .. 

8 Q And this is futures? 

9 A I don't remembec:-. I mean, it's futuc:-es 

10 and spot. Sc whatever. I mean, it's -- I t--::ade 

11 bott of them. 

12 Q And you said the rr.an you sat next to was 

13 Ll(b_)(7_)(C_l ___ ~I" 

14 A Yeah. Well, r.e sat two seats away fc:-crr. 

15 rr.e. To repc:-esent, l(b)(7J(C) l's assistant sat rigr.t 

16 hec:-e and then wr.ere Chc:-is Eglescn sits wasjtbJ(7J(C) 

1 7 l(b)(7)(C) I· 

18 Q And te traded index? 

19 A Ee traded index. 

20 Q o:,ay. And did you do any trading witr. 

21 him? 

22 A I believe I did a few tc:-ades witr. him 

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so 

where he tc:-aded -- whec:-e the index would 

oftentimes r.ave something tc do at the end c:= tr.e 

day, and he'd say -- I don't remember tte amount 

or quantity or the price oc:- the commodity, but 'I 

need to buy a hund~ed lets en tte close. I need 

to do tr.is en tr.e close.' And I'd say, 'No 

problem. I' 11 ta:,e care of it,' and I wculd try 

to fill them bette~ than closing p~ice. 

Q What index was he tc:-ading? 

A I guess thec:-e 's GSCI in general the desk 

tried tc replicate. So, I mean, obviously we're 

not -- they wec:-en't Goldrr.an Sacr.s, but it was tr.e 

GSCI tc:-adec:-s fc:-crr. wr.at I understand. 

Q o:,ay. Did you ever have any 

disciplinac:-y actions at any of the previous jobs 

that you had? 

A irb)(4) (b)(6) (b)(7)(C) I 

Q Any times that you were told you 

exceeded your lirr.its at any :=ic:-ms? 

A l(b)(4) (b)(6) (b)(7)(C) IQ So going back to JP Morgan, whicr. gc:-oup 

wec:-e you in? 

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A I was in the commodities group. 

7 Q And you said Lrb_l(__l(C_l ___ ~I was youc:-

supervisor. He was responsible for youc:-

evaluations? 

A Can I ~ust gc bac~ ta that last 

guest ion? 

Q Uh-huh. 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

L(b_l(4_1 ______________ ~ Ll(b_l(7_1(_c1 ___ ~ 

(b)(7)(C) 

Q o:,ay. And he was responsible :=oc:- your 

evaluations? 

Q Did ycu get evaluated yearly? 

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Q Ttose we~e in writing? 

A~ 

Q And wto was ~esponsible fer ycur 

compensation decisions, your bcnus? 

A (b)(4) 

~---------------~ 

b)(7)(C) b)(4) 

l(b)(7)(C) and, b)(4) 

~--------------~ 

(b)(4) 

IL(b-)(4_1 ----~I- b)(7)(C) 

Q Eow do ycu spell his last name? 

A fb)(7)(C) 

IQ Okay. 

A Li:.:;:e I said, (b)(4l 

~-----------~ 

b)(4) 

(b)(4) 

~--------------------------~ 

(b)(4) 

Maybe I 'rr. saying toe much, but (bl(4l 

~------~ 

4 rb)( l I and I was upset, upset that I might lose 

some responsibility, and b)(4l 

~--------~ 

(b)(4) 

Q What was that pac:.:;:age? 

A (b)(6) (b)(7)(C) 2 2 

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1 (b)(6) 

/bl(7)/Cl . ==~-~ That was in 2008. 

2 Q So ttat was salary and guaranteed bonus? 

3 A Yes. 

4 Q And hew was ttat payable? Casto~ stoc~ 

s Oc'.' -

6 A (b)(4) (b)(6) (b)(7)(C) 

7 (b)(4) (b)(6) (b)(7)(C) 

8 (b)(4) (b)(6) (b)(7)(C) 

9 (b)(4) (b)(6) (b)(7)(C) 

10 (b)(4) (b)(6) (b)(7)(C) 

11 Q Did you lose any stoc~ wten you left JP 

12 Morgan? 

13 A Ne. 

14 Q Sc otf'.er than rLb_l(_71_(C_I ___ ~~ did you have 

15 any direct contact witr. any otr.er supervisors? 

16 A rb)(7)(C) I1 7 Q Okay. And where was he? 

18 A Wten I ~oined, he was in Singapo~e. 

19 Q ur.-hur .. 

20 A And tr.en at scrr.e point, he moved to 

21 London. 

22 Q And sc then wtat was tis involvement in 

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your day-to-day? 

and I were very close in te~ms of 

(b)(4) So yes. 

b)(4) 

. But 

day-to-day we wculd spea:<. I mean, it's hac:-d to 

answer. \riie'd speak sometimes one time, sometimes 

20 times a day, you :.:;:now, but we were -- we wec:-e 

close. 

Q You talked about the rr.etals markets? 

A All markets. Generally tte way I 

recollect is b)(4l 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q And what was your daily contact with 

l(b)(7)(C) I? (b)(7)(C) 

~----~ 

A I sat rigtt next to hirr. I knew it's 

spelled that way. I did that for a while. 

I sat c:-ight next to him. I mean, l(bl(7J(C) I 

and I were pretty close. We had -- rb)(6) (b)(7)(C) 

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(b)(6) (b)(7)(C) 

(b)(6) (b)(7)(C) 

(b)(6) . So we were pretty clcse. fbl(6) (b)(7)(C) fh\f7\fr\ ~-------~ 

(b)(6) (b)(7)(C) 

(b)(6) (b)(7)(C) 

(b)(6) (b)(7)(C) 

(b)(6) 

/h1/71/(;1 

Q Did you -A 

l(b)(6) (b)(7)(C) 1-

Q -- tal:< tc him abcut the markets during 

the day? 

A (b)(4) 

(b)(4) but, as I remerr.ber it, l(b)(7J(C) I 

was --rb)(7)(C) I was ve--::y dif:::ec:-ent from rr.e in his 

styles. 

Q What do you mean by that? 

A I mean, r.e was just, like, tr.e mcst 

organized guy in the world. You ~now, I was 

spilling cof:=ee on a keyboard four times a day. I 

still had a pad and paper tc wc:-ite down rr.y 

positions, and I was generally like a lunatic and 

he was generally like just cool and calm. Sc -

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1 Q And just for the record, could you spell 

2 his last narre? 

3 A l(b)(7)(C) 1-

4 Q (b)(7)(C) ? 

5 A rb)(7)(C) 1. 

6 Q (b)(7)(C) 

~--------------~ 

7 A Correct. I did that a bunch of times. 

8 Q Did ycu trade other ccrr.modities at JP 

9 Moc:-gan? 

10 I don't ~now if I as~ed you. You said 

11 you t~aded FX and ene~gy at C~edit Suisse. Did 

12 you trade othec:- commodities other tr.an precious 

13 rr.etals -

14 A~ 

15 Q -- at JP Morgan? 

16 A rb)(4) 1. 

1 7 Q Okay. And what did you tc:-ade? 

18 A l(b)(4) 1. 

19 Q And was ttat also in a p~cp beak? 

2 0 A l(b)(4) ~ 

21 MR. BENJAMIN: Was that -- excuse me. 

22 \riias that over tirr.e? 

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THE \riiITNESS: b)(4) 

~----------~ 

b)(4) 

(b)(4) 

(b)(4) 

MR. BENJAMIN: AndLl(b_l(_41 ____ ~1? 

THE WITNESS: Ll(b~)(~4) ____ ~1-

BY MS. RYAL::..,: 

Q What do you mean towards the end? How 

rr.any years? 

A Well, like wten I first walked in, I 

was, I mean, totally focused on Lrb_l(_41 ______ ~ 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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l(b)(4) 

1-

I mean, (bl(4l 

(b)(4) 

(b)(4) 

(b)(4) 

4 jtbl( l 1. Genec:-ally that's the way I recall 

it, but the woc:-ld c:-eally changed in the :=act that 

the computers teak eve~ and things generally, as I 

remerr.ber it, moved togethec:-. 

Q So wtat did you mainly look at in terrrs 

of understanding where silver or gold was going? 

41 A That's a good question. l~(b_l(_____ 0 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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(b)(4) 

1-

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q And what was that based en, cl(b_l(_41 ___ ~ 

A I mean, that's a hac:-d thing to de:=ine. 

I mean, I get tc tell ycu. I mean, i:= ycu watch 

these tr.ings for 14 years or 15 years, like, l(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) I 

(b)(4) 

b)(4) 

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(b)(4) 

(b)(4) 

(b)(4) 

IQ So did ycu c:-ely en fundamentals at 

AI'dsaythis.b)(4l 

~--------~ 

(b)(4) 

opinion. Here's what I'd say. I rr.ean, 

(b)(4) 

all? 

[bl(4l 

in my 

(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) 

b)(4) 

I 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) 1-

Q Eow much? 

A t,:bJ(41. 

Q Okay. 

A (b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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1 Q And sc when ycu talk about ETF, wr.at - is 

2 that exchange-traded funds? 

3 A Yeah. 

4 Q o:,ay. 

5 A It's called G::..,o and s::..,v. 

6 Q o:,ay. 

7 A O~ay? So GLD is basically a 10th of the 

8 price of gold. So I guess it would be $120 right 

9 now, whatever, but it tracks the gold price. I 

10 ,(now Barclays put it out. I don't know the exact 

11 :=undamentals of how it works, but fb_)(_4_) -----~ 0

12 (b)(4) 

13 (b)(4) 

14 ~. 

15 Q o:,ay. Did you supervise anyone wf'.ile 

16 you we--::e at JP Morgan? 

1 7 A Did I supervise anyone? jtbl(4l (b)(7J(C) 

18 (b)(4) (b)(7)(C) 

19 l(b)(4) (b)(7)(C) 

20 MR. BENJAMIN: This is when you arc:-ived? 

21 THE WITNESS: wr.en I ac:-rived.1(b)(7)(C) 

22 l(bl(7l(C) I was a recent graduate c:= college, and r.e 

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(b)(4) (b)(7)(C) 

(b)(4) (b)(7)(C) , and tr.en~ moved to ::..,ondon midway ~---~ 

thc:-cugh that experience and a fella named (bl(7J(C) 

l(b)(7)(C) (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

BY MS. RYAL::..,: 

Q Anyone else? 

A Net ttat I recall. 

Q Sc what have you been doing since Credit 

Suisse? 

A Spent a let of time with Jim and Chris. 

Been playing scrr.e golf. Ko. I've been really 

just spending tirr.e with rr.y family. That's it. I 

have three little kids and just been very involved 

witt their lives. 

Q So ycu'~e not employed at the moment? 

A I 'rr. net employed. 

Q We've :,ind of touched on this, but I'm 

going to gc bac:.:;: tc JP Moc:-gan. \riihat was the 

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I 

business of the group tr.at you were in? 

A The business of the group was to, again, 

tr.ink generally (bl(4l 

~-----------------~ 

(b)(4) 

(b)(4) 

~. 

MR. BENJAMIN: In tf'.ose rr.ac:-kets? 

THE WITNESS: In these markets. 

BY MS. RYAL::..,: 

Q You said (bl(4l ? 

A Yeah, and as I c:-err.ember, there were some 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q o:,ay. So you we--::e rb)(4) 

(b)(4) . Yau personally? ~-----------" 

ALl(b_)(4_1 ____ ~ 

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b)(4) Q 0 

A (b)(4) 

Q And wr.o were those? 

A b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

~. 

that's [b)(7)(C) MR. BENJAMIN: And I, 

THE WITNESS: fbl(7J(C) I, fb1(7)(C) I, and 

their groups. 

BY MS. RYAL::..,: 

Q And wr.at do ycu mean by [b)(4) 1, 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q (b)(4) 

rb)(4) 

A (b)(4) 

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1 (b)(4) 

2 (b)(4) 

3 (b)(4) 

4 (b)(4) 

5 (b)(4) (b)(7)(C) 

6 (b)(4) 

7 (b)(4) 

8 l(b)(4) 

9 MR. BENJAMIN: Ycu meaning Ctris Jo~dan? 

10 THE WITNESS: cr.ris Joc:-dan. ~l(b_l(_41 __ ~ 

11 l(bl(4

l I, but generally it's hac:-d to 

12 

13 

differentiate. I 

(b)(4) I L. ---~ you tc:-y l

mean, b)(4l 

~-----------~ 

to do youc:- best, ycu know. 

14 So but b)(4l 

15 (b)(4) 

16 (b)(4) 

17 (b)(4) 

18 (b)(4) 

1 9 l(b)(4) I· 

20 BY MS. RYAL::..,: 

21 Q Sc you were b)(4) 

~-------------~ 

22 (b)(4) 

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1 A Ccrrect. 

2 Q Okay. 

3 A Ttat's the best way tc describe it. 

4 Thank you for that. 

5 Q And then what did you do after ycu made 

6 a deal with them? 

7 A (b)(4) 

8 (b)(4) 

9 (b)(4) 

10 (b)(4) 

11 (b)(4) 

12 (b)(4) 

13 

(b)(4) 

14 (b)(4) 

15 l(b)(4) 1. 

~------~ 

16 Q And en EBS, you said you Lrb_l(_'_1 ---~I? 

17 A EBS is a thing called Elect~cnic 

18 Brokerage Service wr.ere banks -- I think it's only 

19 banks -- can sign up, have a cc:-edit line, and tr.ey 

2 0 can put spot bids and of:=ec:-s in there. And that's 

21 obviously a little different than tte futu~es 

22 because there's an EFP associated. So ttere's 

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1 always a dif=e~ence between spot and futures. 

2 Q wr.at do ycu mean thec:-e 's an EFP 

3 associated? 

4 A EFP stands fer Exchange For Physical. 

s Q ur.-hur .. 

6 A Sc the futures a~e -- unless the EFP is 

7 -- they can only be the same price if the EFP is 

8 trading exactly =iat. 

9 MR. BENJAMIN: They being tf'.e pf'.ysical 

10 and the =utures? 

11 THE WITNESS: Spot and futures. But if 

12 the EFP is plus or minus, tten the~e's going to be 

13 a di:=ference between spat and futuc:-es, but what I 

14 can say is that. 

15 BY MS. RYAL::..,: 

16 Q wr.at does that have tc do witr. EBS? 

1 7 A EBS -- well, because crb_l(_41 _______ ~ 

18 (b)(4) 

19 (b)(4) 

20 (b)(4) 

21 (b)(4) 

22 (b)(4) 

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1 Q By loc~ing at the EFP? 

2 A Just look. Yau can just look at EBS and 

3 see where tr.e spot market is. 

4 Q Oh, C:(ay. 

5 A But generally what I would say is that 

6 (b)(4) 

7 (b)(4) 

8 (b)(4) 

9 (b)(4) 

10 ~l(b-)(4_1 ---~I 

11 MR. BATTAGLIA: Can you execute on the 

12 EBS system er is it primarily fer market? 

13 THE WITNESS: b)(4) 

~------------~ 

14 (b)(4) 

15 (b)(4) 

16 BY MS. RYAL::..,: 

17 Q Is it physical delivery? 

18 A It's two days. Two days value physical 

19 spot delivery. 

2 0 MS. MAN::..,EY: So :::oc:- the record, why 

21 don't ycu just take us through an example. 

22 Pretend you had a client whc, ycu know, eitr.er 

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1 bought er wanted to buy or sell something from 

2 you. Can you ~ust ta:,e us tr.rough tr.e examples 

3 how you pec:-formed ycur duties? 

4 MR. BENJAMIN: An exte~nal client first, 

5 I tr.ink. 

6 THE WITNESS: Okay. Best way to 

7 describe it. b)(4

l 

(b)(4) 8 

9 MS. MANLEY: Now, let me stop you .1(b)(4l 

1 0 l(b)(4) I? 

11 THE WITNESS: (b)(4) 

~--------~ 

12 l(b)(4) I -

13 MS. MANLEY: Okay. Geld meaning spots 

14 or futures? 

4 

15 THE WITNESS: I' rr. saying Lrb_l(__I ----" 

(b)(4) 16 

17 BY MS. RYAL::..,: 

4 18 Q Whicr. means Ll(b_l(__1 -------~I? 

19 A Corc:-ect. (bl(4l 

~----------~ 

(b)(4) 20 

(b)(4) 21 

22 (b)(4) 

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(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

MR. BENJAMIN: And you don't knew wf'.ich? 

THE WITNESS: b)(4) ~------------J 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

MR. BENJAMIN: Would it be r.elpful just 

to run through an example of an internal oc:-der 

~rom somebody li~e -

THE \riiITNESS: Sure. 

MR. BENJAMIN: --cjtb_l(_71_(c_1 _______ J 

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(b)(7)(C) and you can just describe it i~ it's at all ~--" 

different hew tr.e process might woc:-k? 

THE WITNESS: Yeah. Hac:-d to describe. 

\riiitr. a guy like(bl(7J(C whc tc:-aded, Ljtb_l_(4_I _______ ~ 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

. You know, that's the way I 

~-----------~ 

was thin:<ing. 

b)(4) 

b)(4) 

(b)(4) 

rb)(4) 

MR. BENJAMIN: So he would tell you the 

dic:-ecticn? 

THE WITNESS: b)(4l 

~-------------~ 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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(b)(4) 

__ b)(4) So 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) f!o/(71( ILl(b_)(4_1 -~ 

(b)(4) 

(b)(4) 

Kow, I would -

MR. BENJAMIN: wr.en you sayl(bl(4l ~----~ 

~, you rr.eancj{b_l(_41 ___ ~1? 

THE WITNESS: fbl(4l I· 

MR. BENJAMIN: jtbl(4l I on the futures 

excr.ange? 

THE WITNESS: New, (b)(4l 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

MS. MAN::..,EY: So just a general question. 

If I understand you co~rectly, did you in ef:=ect 

~l(b-)(-'l _____ ~I for Mr. rb)(7)(C) r 

THE WITNESS: Yes. 

MS. MAN::..,EY: Did he ever engage in tis 

own :=utures trading or r.edges? 

THE WITNESS: I'rr net sure, to be 

honest, is the answer, but at tr.e end I :,now l(bl(4l I 

(b)(4) 

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1 (b)(4) 

2 MS. MAN::..,EY: Okay. 

3 THE WITNESS: But genec:-ally :::rom what I 

4 recall, he traded spot. 

5 MS. MAN::..,EY: And did Mc:-. rb)(7)(C) I trade 

6 spot with clients or was he a propc:-ietary trader? 

7 THE WITNESS: He was pc:-cprietac:-y 

8 trading. 

9 MS. MAN::..,EY: Thank you. 

10 MR. BATTAGLIA: Ir.Ji tr. that example tr.at 

11 you just gave with Mr. rb)(7J(C) ~ wculd that be before 

12 the rr.ac:-kets went electc:-cnic and we--::e much mere 

13 liquid er would that be after or eithe--::? 

14 THE WITNESS: Beth. 

15 MR. BATTAGLIA: Botr .. Okay. 

16 THE WITNESS: But I would say ttat, 

1 7 like, he did more business with rr.e as tirr.e went on 

18 because he felt that I did a goad jab fer hirr .. 

19 BY MS. RYAL::..,: 

20 Q Eow many other metals tc:-adec:-s were on 

21 the desk with ycu at JP Moc:-gan before Bear Stearns 

22 and then after? 

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1 A Sure. Do you want in New York -Q 

2 Yeat, in Kew Yor~. 

3 A -- oc:- do you want globally? Okay. In 

4 1'')(7)(C) l(b)(4) 

5 (b)(4) 

6 Q This is before Bear Stearns? 

7 A Before Bear Stearns. 

8 Q o:,ay. 

9 A Andfbl(7J(C) I, ~-------~ 

as I mentioned 

10 eac:-liec:-. 

11 Q Waste pricing clients? 

12 A l(b)(4) I 

13 Q~o:,ay. He was assistant? 

14 A fb)(4) fb)(7)(C) 

15 (b)(4) 

16 (b)(4) Now, after well, the desk 

17 alsc, I rr.ean, tr.ese are 4 thecjtb_l<__1 --~I· Do you want 

18 to know thel(bl(4

l I as ~----~ well? I mean, these ac:-e 

19 people that b)(4) are 

~------~ 

2 0 Q Yes. 

21 A o:,ay. So in New York, it was[bl(7J(C) 

22 irb)(7)(C) was a Lfb_l(_41 ___ J and rb)(7)(C) 

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irb)(7)(C) 

IQ Just the two of them? 

A b)(4) 

~. 

Q Okay. And what abcut a:=ter Bear 

Stearns? 

A Aftec:- Bear Stearns, b)(4) 

Ll(b_)(4_1_~1- It was Lrb_)(4_1 _(b_)(7_1(_c1 _________ ~ 

(b)(4) (b)(7)(C) 

She left at some point in 2009 but she -- wten it 

:=ic:-st started. And then over fc:-crr. Bear Stearns, I 

believe fbl(4l I· rb)(7)(C) I, wr.o did tr.e ~--------~ 

(b)(4) • Ll(b-)(7-l(_c_i --~I, rb)(7)(C) 1. 

Q These a~e t~ade~s? 

A rb)(4)1 t:bJ(7)(C I was a Ll(b_l(_41 __ ~ I'm sorc:-y 

abcut that. 

Q No; that's okay. 

A fb)(4) rb)(7)(C) 

(b)(7)(C) 

Q o:,ay. 

A And then the "fb_)(_41 ___ ~ were "fb_l(_7_)(C_I ___ ~ 

and his assistant, whicr. was[Lb-1(_71_(c_i ______ ~I· 

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Q wr.at about in ::..,ondon? 

A In Lendon? Be=o--::e and after? 

Q Yes. 

A o:,ay. In ::..,ondon before, thel(bl(4l ~---~ 

we--::e Lfb_l(_7l_(c_i ____ ~I, who was on thecfb_l(_4_1 ___ ~I and 

the fbl(4) f. (b)(7)(C) 

Then tE1}(7l( I went over thec:-e. I don't know the name 

4 of the Lfb_l(_1 --~I 

MR. BENJAMIN: You you mean 

Mr. rb)(7)(C) 

THE \riiITNESS: jtbl(7)(C) I· I don't 

:,now the names c:= tr.e fbl(4l I· 

BY MS. RYALL: 

Q Was he a trader or an assistant over 

there? 

A When he went over there, he was brought 

over there to b)(4l 

(b)(4) 

Q o:,ay. 

A I don't know the rr.ac:-keters over thec:-e. 

And then after Bea--:: Stearns, did anybody go to 

::..,ondon? I dcn't thin:< sc. As far as I --::err.ember. 

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1 And then in Singapore, Lrb_l(_7_l(C_l ____ ~I., and we did -JP 

2 

3 

Moc:-gan did take somebody fc:-crr. 

Singapore narr.ed Lrb_l(_7_1(C_I ____ ~~ 

Bear Stearns 

wr.o subsequently 

4 

5 

left 

MR. 

after a year or so. 

BENJAMIN: So l(bl(7l(C) I was in 

6 Singapore be=o--::e the Bear Stea--::ns acquisition? 

7 THE WITNESS: ur.-hur .. 

8 BY MS. RYAL::..,: 

9 Q And these were all traders in the client 

10 group? 

11 A I don't know what you mean by that. 

12 Q They =illed client orde--::s? 

13 

14 

15 

16 

1 7 

A (b)(4) 

~l(bl_('_I --~I 

Q o:,ay. Was there anyone othec:-

l(bl(7J(C) I in London who we--::e simply 

A (b)(4) 

than (b)(7)(C) 

a prop trader? 

18 (b)(4) b)(7)(C) 

19 (b)(4) 

20 

21 

Q In 

A (b)(4) 

metals? 

22 (b)(4) 

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(b)(4) 

(b)(4) 

~-----------------------~ 

. I 

don't know i "'rb)(7l( I was part C ~ tr.e fb)(4) ~ :1 ~------~ 

l(b)(4) I · 

l(b)(7)(C) I (b)(4) 

l

(b)(4) I 

L-------~' and -

MR. BENJAMIN: Ycu say tr.e group, you 

rr.ean the pc:-cprietac:-y gc:-cup? 

THE WITNESS: b)(4) 

l(b)(4) I, and I can't think of can't think c:= 

anyone else. 

BY MS. RYAL::..,: 

Q Did you also deal withfbl(7)(C) land 

Ll(b-1(_71_(c_i __ ~I and rb)(7)(C) I? 

A They would trade :=rom time tc time, yes. 

Q So going back to pre-Bear Stearns at 

your des:,, so ycu were b)(4l 

(b)(4) ? 

A In tte New Yark time zone. 

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I 

Q In the Kew Yor:< tirr.e zone. And whc 

handled :=oc:-wards at that time, i:= anyone? 

A I believe it was Lrb_l(_7l_(c_1 ____ ~I, and r.e 

(b)(4) 

believe SC. 

Q Did you work witt him at all in you~ 

trading? 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) What's happening. 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q Eow long was there b)(4l 

A As I remembec:- it, the whole tirr.e. 

Q Tf'.e wr.ole time you were tr.ere? 

A Yeah. 

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l

(b)(7)(C) I "· --~carr.e en and was dcing the same ~ob as you? 

He tad been at Bea~ Stearns? 

A Ee had been at Bear Stearns. 

Q Sc what did he do when he got to JP 

Moc:-gan? 

A b)(4) 

Q Okay. Oh, okay. 

A Sc I was, I mean, b)(4l 

~--------~ 

b)(4) So -

Q And ycu "rb_l(_'_I ----~I? 

Ajtb)(4) 1· As I remembec:- it,~ 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) 

Q So ycu 1 c:-e less active now after rb)(7)(C) I 

(b)(7)(C) 

gets thec:-e. Sc what did ycu de to :=ill up ~-~ 

that time? 

A I tc:-y to -- I mean, the way I remember 

it, b)(4) 

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(b)(4) 

fb)(4) 

(b)(4) 

(b)(4) 

l(b)(4) I. 

But what de you do to fill up that time? 

4 I mean, that's a weird question because rb)( l ~----~ 

(b)(4) 

(b)(4) 

Q so wr.at bJ(4l 

~--------------~ 

(b)(4) 

~---------~ ' 

A (b)(4) 

(b)(4) (bl(7J(C) You knew, I can remember 

~------~,~~ 

a few instances where b)(4l 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

So -

Q Was tr.is in ycur fbl(4l 

A (b)(4) 

(b)(4) 

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(b)(4) 

IL(b_)(4_1 -~ 

Q What did sorc:-y. wr.at did Lrb_l(_71_(c_1 __ ~ 

(b)(7)(C) de? 

A l(b)(7)(C) was a new -- he Lrb_l(_41 __ ~ 

(b)(4) 

(b)(4) 

(b)(4) Thec:-e's -- and I 

don't know -- I don't know too much about ~ 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q What did Mr. fbl(7J(C) I do when he came 

on? 

A Mr. "l(b_l(_71_(C_l __ ~I was -- was a fbl(4) 

(b)(4) 

irb)(7)(C) I 

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1 MR. BENJAMIN: If there's a convenient 

2 time for a break? 

3 MS. RYAL::..,: Yeah. We can take a 

4 :=ive-minute brea:.:;: new. o:,ay. Off the record. 

5 (Recess} 

6 MS. RYA::..,L: \riie will go back on the 

7 record and en tr.e break we r.ad a request fc:-crr. Mr. 

8 Schroeder. 

9 MR. SCEROEDER: Yes. On behalf c::: JP 

10 Moc:-gan, we'd ask that tr.e transcript be given FOIA 

11 confidential t~eatment. Mr. Jo~dan is being asked 

12 questions about the business of JP Morgan and it's 

13 confidential. We will send a lette~ to Ms. Ryall 

14 to confirm the request. 

15 MS. RYA::..,1: And OU~ FOIA officer? 

16 MR. SCEROEDER: And the FOIA officer. 

17 MS. RYA::..,L: And Mr. Benjamin? 

18 MR. BENJAMIN: Yes. Just very briefly, 

19 a clarifying question. 

2 0 What degree did you earn from the 

21 University a~ Virginia? 

22 THE WITNESS: A BA, not an FA. Sorc:-y. 

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I get ttat wrong. 

BY MS. RYAL::..,: 

Q Scrr.e places have different degrees. 

A Tr.at would have been irr.pc:-essive, but I 

didn't do that. 

Q Before tr.e break, we we--::e taL(ing abcut 

Mr. rb)(7)(C) 1· Ycu said r.e was tr.el(b)(4) ~---~ 

(b)(4) with Mr. rb)(7)(C) p. 

A Corc:-ect. 

Q wr.at else did he do, i:= anything? 

A He (b)(4) 

~-------------~ 

b)(4) 

Q Did you work together with hirr in 

trading at all? 

A What do you mean? 

Q Did you do any business with him, tc:-ades 

witt him o--:: :=o--:: him or -

A I recall b)(4l 

(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) 

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Q And wr.at were the EFPs for? 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) (b)(7)(C) 

1-

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1 Q wr.y wculd you b)(4l 

~-----------~ 

2 

3 A Well, (b)(4l 

(b)(4) 4 

(b)(4) 5 

(b)(4) 6 

(b)(4) 7 

(b)(4) 8 

(b)(4) 9 

10 Q You said that as a b)(4) 

~-------~ 

11 Ljtb_l(_'l_~I, you rr.igr.t L(b-l(_'I _______________ J 

12 ~l(b_)(4_1 -~lo 

13 A Yeah. I mean, ~ust over the couc:-se of 

14 business, I guess a good way to describe it. Like 

15 let's just say (bl(4l 

~----------------~ 

16 (b)(4) 

1 7 (b)(4) 

18 MR. BENJAMIN: l(b)(4

l I? ~----~ 

19 THE WITNESS: (b)(4) 

2 0 (b)(4) 

21 (b)(4) 

22 (b)(4) 

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(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) IMR. BENJAMIN: You you l(b)(4) say 

(b)(4) Do ycu mean you r.ave an 

EFP? 

THE WITNESS: b)(4) 

l(b)(4) I 'IT. scrry. Let me clarify. I 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) I 

MR. BENJAMIN: Some of that EFP risk? 

THE WITNESS: b)(4) 

(b)(4) 

(b)(4) 

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(b)(4) 

(b)(4) 

(b)(4) (b)(7)(C) 

MS. MAN::..,EY: I'm sorry. I walked in 

late. I'rr going to tave to ask you to ~epeat 

this. 

THE WITNESS: Sure. Soc:-ry. 

MS. MAN::..,EY: And let me help you. Let 

rr.e explain my paint of confusion and maybe you can 

clarify it for me. 

THE WITNESS: Sure. 

MS. MAN::..,EY: I thought I understood you 

just a few moments ago to say tr.at, you ,(now, 

(b)(4) . \riiell, nc. l

b)(4) 

--------------" "--~ 

(b)(4) 

(b)(4) 0 

(b)(4) THE WITNESS: 

(b)(4) 

l(b)(4) I" 

MS. MAN::..,EY: Okay. 

THE WITNESS: b)(4) 

(b)(4) 

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MS. MANLEY: All rigr.t. So ycu have a 

(b)(4) 

b)(4) THE WITNESS: 

(b)(4) 

MS. MAN::..,EY: How did you get the l(b)(4) 

l(b)(4) 1, 

THE WITNESS: (b)(4) 

(b)(4) 

(b)(4) 

MS. MAN::..,EY: I understand ttat. 

THE WITNESS: Okay. So b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) I· 

MS. MAN::..,EY: Okay. 

THE WITNESS: b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) 

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4 1 MR. BENJAMIN: New ycu' c:-e rb)( ) ~----~ 

2 ~ 

3 THE WITNESS: b)(4) 

~------------~ 

4 

5 

6 

7 

8 MS. MAN::..,EY: So if I understand you 

9 coc:-rectly, what you' re saying is jtbl(4l ~-----~ 

(b)(4) 10 

(b)(4) 11 is that correct? 

12 THE WITNESS: Yeah. 

13 MS. MAN::..,EY: It's net -

14 THE WITNESS: It's net I don't knew. 

15 I just want to make suc:-e I get the words right. 

16 I'm soc:-ry. 

17 MS. MAN::..,EY: As you testified earlier, 

18 you :,now, tr.ere are transactions that tr.e COMEX 

19 operates called EFPs. 

20 THE WITNESS: b)(4) 

21 (b)(4) 

~-------------~ 

22 MS. MAN::..,EY: Right. Rigr.t. But what I 

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b)(4) hear you saying is, 

rb)(4) I 

THE WITNESS: fbl(4) I 

MS. MAN::..,EY: You're not actually 

l(b)(4) 1-

THE WITNESS: fbl(4l 1· ~---" 

MR. BENJAMIN: Unless ycu tten -

THE \riiITNESS: (b)(4) 

(b)(4) 

l(b)(4) f°l(7)(C) r)(4) 

(b)(4) 

(b)(4) 

~l(b-)(4_1 -----~I 

MR. BENJAMIN: To fellow througt the 

example. 

THE WITNESS: Yeah. 

MR. BENJAMIN: You just explained a 

hypothetical -THE 

\riiITNESS: (b)(4) 

~---------~ 

-MR. 

BENJAMIN: Held en. You just 

explained a hypothetical but, ycu know, realistic 

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1 scenaric where you would b)(4

l 

~-----------~ 

2 (b)(4) 

3 (b)(4) 

4 THE 4 WITNESS: fbl( l 1. ~---~ 

5 MR. BENJAMIN: Then I tr.ink what you 

6 we--::e explaining when Ms· l(bl(7J(C) I was entering the 

7 room was that tr.ere could be b)(4l 

3 (b)(4) 

9 (b)(4) 

10 cl(b_l(_41 ______ ~ 

11 THE \riiITNESS: Correct. 

12 MR. BENJAMIN: -- (b)(4) 

~----------~ 

13 (b)(4) 

14 (b)(4) 

15 THE WITNESS: b)(4) 

16 MR. BENJAMIN: I think you were 

17 explaining thec:-e would be situations where you 

18 , "' IT.lg1.t, b)(4) 

~---------------------J 

19 (b)(4) 

20 (b)(4) 

21 THE WITNESS: Genec:-ally I waslc(b-)(_41 ____ ~ 

22 (b)(4) 

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(b)(4) 

MR. BENJAMIN: o:,ay. 

MS. MAN::..,EY: Here's an instruction to 

you. Througr.out the course c:= ycur testirr.ony, 

okay, sc that we have a clear c:-ecoc:-d at the end of 

it, when you use the terrr. "EFP," take a rr.oment and 

let us know whethec:- or not it's an e:=fective EFP 

THE \riiITNESS: Sure. 

MS. MAN::..,EY: or you're actually 

talking about -

THE \riiITNESS: Tc:-ading. 

MS. MAN::..,EY: a true EFP that's traded 

on the COMEX. 

THE WITNESS: Ne pc:-cblem at all. Ko 

problem. 

MR. CUSIMANO: I actually have a 

b)(4) :=allow-up question to ttat. 

(b)(4) 

(b)(4) 

(b)(4) 

THE WITNESS: Well, again, cjtb_l(_4_1 ____ ~ 

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1 (b)(4) 

2 b)(4) b)(7)(C) and 

3 rb)(7)(C) 1. b)(4) 

~--------------------~ 

4 (b)(4) 

5 (b)(4) 

6 (b)(4) 

7 l(b)(4) I8 MR. CUSIMANO: So ycu wculd fbl(4l 

9 (b)(4) 

10 (b)(4) 

11 ~? 

12 THE WITNESS: b)(4) 

13 (b)(4) 

14 (b)(4) 

15 (b)(4) 

~-----------------------~ 

16 (b)(4) 

17 MR. CUSIMANO: o:,ay. 

18 BY MS. RYALL: 

19 Q So wtere we got c~f en ttis -A 

2 O Year .. 

21 

22 

Q -- we we--::e taL(ing about 

with Mr. rb)(7)(C) and you 

what 

said 

you trade 

some ? 

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A Yes. 

Q Anytting else? 

A Well, (b)(4) 

(b)(4) 

Q Physical? 

A (b)(4) 

(b)(4) 

(b)(4) 

Lb-l(_'l ________ ~,~"(b-)(-'1------------~ 

(b)(4) 

MR. BENJAMIN: EFPs. 

THE \riiITNESS: b)(4) 

(b)(4) 

BY MS. RYALL: 

Q On the boc~s instead c~ going to the 

exchange? 

A (b)(4) 

Q O~ay. You tal~ed a little bit about tow 

you woc:-ked with the vac:-ious traders. The gc:-cups 

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1 in New York and ::..,ondon, I mean, generally hew did 

2 they wor~ tcgetter? 

3 A Generally, as I mentioned earlier in rr.y 

4 testimony, b)(4l . Sc, as I 

5 recall, b)(4l 

6 (b)(4) 

7 (b)(4) 

8 b)(4) 

9 (b)(4) 

10 (b)(4) 

11 (b)(4) 

12 (b)(4) 

13 l(b)(4) 

14 Q And when you said don't do anything, 

15 what I understand, i~ you had a client trade come 

16 in -

1 7 A Ll(b_)(4_1 ~ 

18 Q -- and you were going tol(bl(4l I -A ~---~ 

19 ~. 

20 Q -- (b)(4) 

21 b)(4) 

22 A Well, hec:-e's here's a good example of 

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1 that. (b)(4l 

2 (b)(4) 

3 fb)(4) 

4 (b)(4) 

5 (b)(4) 

6 (b)(4) 

7 

8 

9 b)(4) 

10 (b)(4) 

11 (b)(4) 

12 b)(4) 

13 (b)(4) 

14 (b)(4) 

15 (b)(4) 

16 ~ rb)(7)(C1 Lb-1('_1 

1 7 Q wr.at do ycu 

18 rr.e. 

19 A Yeah. (b)(4l 

(b)(4) 20 

(b)(4) 21 

(b)(4) 22 

1(0)(7)(C) l(b)(4) 

______________ ~ 

meanl(bl(4

l I? Explain that to 

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I 

(b)(4) 

(b)(4) 

l(b)(4) 

(b)(4 b)(7)(C) (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q So ycu have (bl(4l 0 

__ (b)(4) A Just 

(b)(4) 

(b)(4) Scrry about tr.at. 

Q It's what they teach us in law school. 

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A Five words. Aye. Too much coffee. 

l

(b)(7)(C) I 

Q Was thec:-e also a trader"· ______ ° 0 

A (bl(7J(C) . Ee was a 

rr.ac:-keter, net a trader. 

Q o:,ay. 

A Yeah, I forget tc mention him. I guess 

he was the cne guy that came over tc the London 

group on the mar:,eting side. 

Q o:,ay. 

A I've never met hirr. but, yeah. 

ojtb)(7)(C) --------~I you said was the ~ 

(b)(4) Did you t~ade with him? 

(b)(4) A 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

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(b)(4) 

7 Q What about fb_l(__l(C_l ___ ~I? 0 

Al(b)(7)(C) 1- He -- he was a JP Mcrgan 

employee when I got there and as I recall -- I'm 

b)(4) trying to tr.ink 

l(bl(4l I and he went tc Bear Steac:-ns, I believe, and ~--" 

then I don't really remerr.ber his time line. I de 

remerr.ber he did come bac:.:;: in some capacity in 

Singapore tcwac:-ds tr.e end of my tenure thec:-e, but 

I'm not exactly suc:-e and he was -- r.e was mainly 

involved in PGMs, marketing and trading. 

Q Did you r.ave any interaction witr. him in 

your t~ading? 

A I don't remembe~ any. 

Q Yau said you worked a lot witt M~. 

rb)(7)(C) p. 

A Yes. 

Q Sc when ycu would do [bl(4l 

~-------~ 

Ll(b_l(4_1 ---~I Mr - l(b)(7)(C) ~(b)(4) 

(b)(4) 

A Generally , because we talked so 

often tr.roughout the day, I remerr.ber, I vaguely 

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remerr.ber -- not vaguely -- I remember tr.at r.e 

would oftentimes call me and he'd say, l(bl(4l 

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(b)(4) 

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(b)(4) 

(b)(4) 

(b)(4) 

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Q But whec:-e did -- where did tr.is get 

recorded anywhere at JP Moc:-gan that l"(b_l(_41 ______ ~ 

(b)(4) 

A It wculd (b)(4) 

(b)(4) , and generally I recall 

~-------------~ 

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that rbl(4l at the time, lc(b-1(_71_(c_i ___ ~ would ~----~ 

(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) 

1-

So, you knew, I'd see I rb)(4) 

l(b)(4) then I'd, you know, a few times have tc 

say, j{bl(4) l(b)(7)(C) rb)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q The spot? 

A rb)(4) E:9. 

Q Did you personally keep track of what 

you did eacr. day? Yau mentioned a Lrb_l(_41 __ ~ 

eac:-liec:-. 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

D 

l(b)(4) 

MS. MAN::..,EY: Excuse rr.e. The tb)(4) 

that you ~ust descc:-ibed, would that jtbl(4l 

Wculd it l(b)(4) (b)(7)(C) 1, 

THE WITNESS: It would [bl(4) 

MS. MAN::..,EY: It wouldl(bl(4l I Okay. 

WITNESS: rb)(4) (b)(7)(C) THE 

(b)(4) 

(b)(4) 

l(b)(4) 

1-

MS. MAN::..,EY: Okay. 

THE WITNESS: And it would jtbJ(4l 

(b)(4) 

(b)(4) 

rb)(4) 

1-

MS. MAN::..,EY: And do you remerr.ber oc 

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recall the designation c:= fbl(4l I? 

THE WITNESS:~ -- wf'.at do ycu mean? 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

BY MS. RYAL::..,: 

Q O~ay. So can you just spell that out 

:=oc:- us? 

A fb1(4) IQ Okay. Is that a portfolio? 

A It's -- wr.en I use the word l(bl(4l ~--~ 

(b)(4) 

(b)(4) 

Q o:,ay. And did you use Lfb_l(_41 ___ ~ 

l(bl(4

l I besides that one? 

A (b)(4) 

(b)(4) 

(b)(4) rb)(7)(C) was the gold 

trader previous to (bl(7J(C) and b)(4l 

(b)(4) 

(b)(4) 

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1 (b)(4) 

~-------------------------~ 

2 (b)(4) 

3 (b)(4) 

~------------------------~ 

4 (b)(4) 

5 MR. CUSIMANO: Eow would it show the 

6 position in te~ms of dolla~s o~ ounces, lots? 

7 THE WITNESS: b)(4) 

8 

9 

10 

11 

12 (b)(4) 

13 (b)(4) 

14 l(b)(4) 

15 b)(4) 

16 (b)(4) 

17 (b)(4) 

18 (b)(4) 

19 (b)(4) 

20 (b)(4) 

21 MR. CUSIMANO: Eow would it show option 

22 positions? 

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THE \riiITNESS: Again, I wasn't an option 

But (b)(4) trader. 

(b)(4) as I as I recall, 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

(b)(4) (b)(7)(C) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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1 (b)(4) 

2 (b)(4) 

3 (b)(4) 

4 (b)(4) 

5 ~l(b_)(4_1 -~I6 MR. CUSIMANO: o:.:;:ay. What wculd it mean 

7 to you i:= ycu leaked atlL(b_l(_41_~1 and ycu saw l(bl(4l 

8 Ljtb_l(_4

_1 ______ 0 in a transaction, the counterpac:-ty 

9 was b)(4) 

10 THE WITNESS: b)(4) 

11 (b)(4) 

12 (b)(4) 

13 MR. CUSIMANO: o:,ay. So this would be 

14 something tr.at would be rr.anually entered? 

15 THE WITNESS: b)(4) 

16 fb)(4) I tb)(7)(C) gene~ally. I would 

1 7 thin:< it was a mista:,e. 

18 MR. CUSIMANO: o:,ay. 

19 MS. MAN::..,EY: And I'm sorry. How 

20 :::requently did you Lrb_l(_41 _____ ~F 

21 THE WITNESS: Ttat's a tougt, tough 

22 question. I'rr trying to -- when I first got 

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l 3 

to attach a pec:-centage to it, but genec:-ally 

I'd have, li:,e, b)(4) 

As I stated earlier in rr.y testirr.ony, t:bJ(4) I 

there, not very :=requently and it tough tc -tcugh 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

But I found fc:-crr. my experience that tb)('I 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) I But hew often did I trade it? 

I'd say twice a rr.onth. No. Less than once a 

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1 week. 

2 MS. MAN::..,EY: And would it be -- would it 

3 relate to ycur client business er wculd it be part 

4 of youc:- proprietary trade? 

5 THE WITNESS: b)(4) ~-------------" 

6 (b)(4) 

7 (b)(4) 

8 (b)(4) 

9 MR. BENJAMIN: It was in the proprietary 

10 pa~t of your t~ade? 

11 THE WITNESS: b)(4) 

~--------~ 

12 (b)(4) 

13 (b)(4) 

14 MS. MAN::..,EY: Okay. And you described to 

15 us youc:- understanding of theta. Can you describe 

16 to us ycur understanding of gamma? 

1 7 THE WITNESS: Yes. Gamma is something 

18 that you get positive garr.ma by being long options. 

19 Now what that means, if you are positive gamrr.a -so 

2 0 you've spent a certain arr.aunt of money en an 

21 option. Ir.Ji tr. that each day, it's going to decay 

22 slightly and slightly and slightly. So you're 

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1 going tc be losing a little bit eacr. day. 

2 MR. BENJAMIN: o= value? 

3 THE WITNESS: Of value. That's called 

4 theta. I don't want to get into theta. But gamma 

5 is the -- wtat you get for losing tteta or time 

6 decay value, you get gamrr.a, which means that the 

7 rr.ac:-ket goes lower, whicr. I described earlier, ycur 

8 position gets starter and starter and starter. 

9 As the rr.ac:-ket goes hi gr.er, you' re 

10 getting longer and longer and longer, [bl(4l ~---~ 

11 (b)(4) 

12 (b)(4) 

13 (b)(4) 

14 (b)(4) 

15 l(b)(4) I- ~-----~ 

16 BY MS. RYAL::..,: 

17 Q Ycu say Lrb_l(_'_I -----~I, ycu mean buying 

18 :=utures? 

1 9 A (b)(4) 

~-----------~ 

20 MR. BENJAMIN: Did you mean to say just 

21 as a general mattec:- that b)(4l 

~------------~ 

22 (b)(4) 0 ~-------------J 

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1 THE \riiITNESS: b)(4) ~------------J 

2 (b)(4) 

3 (b)(4) 

4 (b)(4) 

5 (b)(4) 

6 (b)(4) 

7 b)(4) 

8 l(b)(4) I- I mean, it sounds easy. It's net easy, 

9 but b)(4) 

10 l(b)(4) I 

11 BY MS. RYAL::..,: 

12 Q So tr.e trades that ycu did directly with 

13 Mr. rb)(7)(C) ~ those went into the Lrb_l(_4_1 ______ ~ 

14 Ll(bl_('l __ ~I" 

15 A Ll(b_)(4_1 ______ ~ 

16 MR. BENJAMIN: Ycur side of them. 

1 7 THE \riiITNESS: My side. 

18 BY MS. RYALL: 

19 Q Ycur side of them. And did the futures 

20 that ycu Lrb_l(_'l _____ ~I that ~b_l(_41 ________ ~ 

21 ~? 

22 A (b)(4) 

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1 (b)(4) 

2 fb1(4) rb)(7)(C) r)(4) 

3 (b)(4) 

4 Q o:,ay. So how did it b)(4) ~--------J 

5 (b)(4) 0 

~------------------~ 

6 A (b)(4) 

~--------------------~ 

7 rb)(4) I· 

8 Q So any tirr.e you did trades in Glcbex, it 

9 (b)(4) 0 

10 A (b)(4) 

11 (b)(4) 

12 (b)(4) 

13 (b)(4) 

14 (b)(4) 

15 (b)(4) 

16 (b)(4) 

17 cl(b-)(-4)--------~ 

18 Q So wr.en you did the futures, is thec:-e 

1 9 (b)(4) 

~-------------------------J 

2 0 (b)(4) 

~-----------------------~ 

21 rb)(7)(C) p. 

22 A Yeah. (b)(4l 

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115 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) (b)(7)(C) 

(b)(4) 

Q So you could tell it because you ~new 

what you were doing, but if I leak back now, how 

can I tell? 

A I 1 ~ust ttink you can l(b_l(_4

______ ~1· 0

Q By what? 

A By -- b)(4) 

~-----------------~ 

b)(4) 

l(b)(4) l~JUl( I b)(4) 

(b)(4) 

Q o:,ay. And when ycu say typical versus 

lac:-ger, what ac:-e you taL(ing about? 

A It's a tough question. I rrean -- I 

rr.ean, it depends what ycu mean by size but -

Q Well, what was norrral size? 

A Generally E,(bl(4l 

(b)(4) 

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Q Okay. \riihat 

A He was jtbJ(4) IQ Any genec:-al amount? 

(b)(4) A If I was 

b)(4) 

(b)(4) 

41 Ll(b_l(_______ JI• But it's a tough question. I mean, 

(b)(4) 

MR. BENJAMIN: Can I ask ~ust a guic:.:;: 

question, Ctristine? 

Ms. Ryall was asking ycu a rr.inute ago 

just how one, a pec:-son who wasn't actually 

involved in executing tte trades, rLb-)(_41 _____ ~ 

(b)(4) 

(b)(4) 

rb)(7)(C) 

Would you expect tr.at thec:-e would tend 

to be a relationship in te~ms of time and size i= 

one looked b)(4l 

~----------~ 

THE WITNESS: rb)(4l . 

1 

BY MS. RYAL::..,: 

Q Did ycu have speci=ic trade 

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auttorizaticns? 

A (b)(4) 

Q In terms of products that you were 

allowed to trade -

A t,:b)(4 I 

Q at JP Morgan? 

A As far as I know, rb)(4l I 

Q Okay. \riihat about limits? 

A As far as I know -- well, Lrb_l(_41 ___ ~1- (b)(4) 

(b)(4) 

Q Do ycu c:-ecall whether you were told what 

your limits are or were? 

A l(b)(4) 

Q o:,ay. Were ycu given anything in 

writing? 

A l(b)(4) 

Q Who would have kept track of whethec:- you 

we--::e within your limits at JP Margan? 

Q Were you allowed to trade for otr.er 

traders, like de the hedge for them instead of 

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1 them doing it ttemselves? 

2 A Well, (b)(4l 

~------------~ 

3 I want to ma:,e sure I answer this correctly. l(b)(41 

4 

5 (b)(4) 

6 (b)(4) And there 

7 we--::e, I thin:< I said earlier in rr.y testirr.ony, 

3 (b)(4) 

9 (b)(4) So -

10 Q Cculd trades that you did go into 

11 someone else's book, portfolio? 

12 A Could tc:-ades that I? (b)(4) 

13 (b)(4) 

14 (b)(4) . What de you -- I 

15 rr.ean, wr.at do ycu exactly mean? 

16 Q Well -

1 7 A Li:,e i:= I did a trade and it got entered 

18 as cne c:= =· s [o__J trades er scrretting? 

19 Q Purposefully. Could you do one fer hirr. 

20 and then put it in tis book? 

21 A Well, (b)(4) 

22 (b)(4) 

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(b)(4) . So - ~---------------------~ 

MR. BENJAMIN: Ycu've already explained 

an example c= ttat. 

THE WITNESS: b)(4) 

(b)(4) 

~-------~ 

MR. SMITH: I guess, for exarr.ple, if Mc:-. 

7 Ljtb_l(__l(C_l __ ~I was out of the office er scrr.etr.ing like 

that and he wanted you to execute a trade fer hirr., 

could ycu gc into his beak -

THE WITNESS: Could I go -

MR. SMITH: -- and execute a trade fer 

him? 

THE WITNESS: b)(4) 

(b)(4) 

~---------------~· If ;b)(7)(C -- I'm 

just tc:-ying to think somebody tr.at I tc:-aded witr .. 

l

(b)(7)(C)I As I I said earlier ,(bl(4l 

~-----------l___J 

b)(7)(C b)(4) (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

rb_)(-4)--~t-b)-(7-)(~C)~ Sc, L(b-)(-4)------------~ 

(b)(4) 

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BY MS. RYALL: 

Q The ether side wculd still be in your 

book? 

A b)(4) 

~fbl_('l __ ~IQ So supposing you we~en't in the c:=fice 

and you needed to hedge something tr.at you r.ad 

done withr?{(7)(1. Could somebody else in tf'.e of:::ice 

do the trade for you and it would gc directly into 

your boa~? 

A 1::: I was out of the c:=fice and I wanted 

to buy er sell gold or silver, they l(bl(4l 

(b)(4) 

l(b)(4) 

Q All right. Sc if b)(4

l 

~----------~ 

(b)(4) 

(b)(4) 

A (b)(4) 

Q While you were at JP Moc:-gan, did they 

give you any compliance training? 

A (b)(4) 

(b)(4) 

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Q Did ttat tave a particular name? 

1 A It was called Lrb_l(_'_------~I· I rr.ean, 

that's r.ow I remember it. I was like a cl(b_l_(4_1_~ 

(b)(4) 

(b)(4) 

4 

"(b-1(__1 ----------~· I know thec:-e was a c!tb_l(_4

1 __ J 

(b)(4) 

(b)(4) 

(b)(4) 

~l(b)_('_I -~I 

Q What we--::e the subject mattec:-s of them; 

do you recall? 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q Do ycu --::ecall ever having classes o--:: 

web-based serr.inars about appropriate and 

inappropriate trading practices? 

A l(b)(4) I 

Q Did cfb_l(_7_1(C_l ___ ~I ever talk to you about 

approp--::iate or inappropriate t--::ading p--::actices? 

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1 A b)(4) 

~-----------~ 

2 Q Eow did r.e mcni tcr wr.at you were doing 

3 on a daily basis as ~a~ as you~ trading? 

4 A I mean, Lb_l(_41 ___________ ~· I 

5 rr.ean, 

4 L(b_l(_1 __________________ ~· So, 

6 you :(now, hew did he monitor? I rr.ean, [bl(4

l ~-----~ 

7 b)(7)(C) (b)(4) 

8 

9 

10 

11 

12 (b)(4) 

13 (b)(4) 

14 (b)(4) 

15 So but, I mean, b)(4

l 

16 (b)(4) 

17 (b)(4) 

18 (b)(4) 

19 Q Did you know what he was doing in his 

20 options book? 

21 A (b)(4) And like -- and 

22 rr.e describing options is not a great science 

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because I -- before I get tc JP Moc:-gan, I didn't 

understand things li:,e gamma and theta that well 

and, sitting next tc (bl(7J(C, I really :<ind of 

learned a let but -

Q Did you learn a let by hearing him o~ 

did he speci~ically 

A~ 

Q -- teach you? 

A~. 

Q Yau mentioned ea~lie~ the fLb_l(_41 ____ ~ 

b)(4) Did you 

~eep these? 

A (b)(4) 

(b)(4) , but they, you know, it 

would be like, as I remerr.ber it, a fbl(4) 

~------~ 

(b)(4) 

(b)(4) 

l(b)(4) I 

Q b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 0 

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A fb1(4) 

~----~ 

4 Q Okay. And cjtb_l(_1 _____ ~I? 

A (b)(4) 

Q Okay. And can you tell us [bl(4l ~---~ 

b)(4) 

A (b)(4) 

(b)(4) 

(b)(4) 

b)(4) b)(7)(C) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q Was thec:-e ~---------~ b)(4l 

c(b_l(_41 _______________ ~' 

A l(b)(4) IMR. SMITH: Did you or rb)(7)(C)r- say 

THE WITNESS: rl(7)(C) _ 

1 

BY MS. RYAL::..,: 

Q Ttat wascfb_l(_71_(c_i __ ~I? 

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1 A rb)(7)(C) I 

2 Q And te was on the same desk as ycu? 

3 A Yes. 

4 Q Eow close did he sit to you? 

5 A I'd say -

6 MR. BENJAMIN: At that tirr.e? 

7 BY MS. RYAL::..,: 

8 Q At tr.at time? 

9 

10 

A At 

rb)(4) 

tr.at time, l(b)(4) 

l(b)(4) 

:(b)(7)(C) 1~ 

p)(7)(C) I~ 

11 Q Sc ~people then on fc:-crr. ycu? 

12 A rb)(4) rb)(7)(C) 

f 

13 tb)(7)(C) I c[ ____ ~, 

d an -- h yea . l(b)(7)(C) I, (b)(7)(C) 

14 and (b)(7)(C) (b)(4) 

15 (b)(4) 

16 (b)(4) 

1 7 Q Mr. rb)(7J(C) ~ was he on the desk most of 

18 the day? 

19 A rb)(4) I20 Q Ee had an office as well, though; right? 

21 A l(b)(4) I 

22 Q Yes? 

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1 A (b)(4) 

2 Q You mentioned earlier that ycu did trade 

3 on Globex. Did you tave a specific use~ ID for 

4 that? 

5 A (b)(4) 

6 (b)(4) 

7 (b)(4) 

8 Q (b)(4) 0 

~-------------~ 

9 A~. 

1 O Q And tr.en so b)(4l 

~----------~ 

11 b)(4) 

12 A (b)(4) 

13 b)(4) 

14 

15 

16 (b)(4) 

1 7 Q wr.en you did trades on the exchange, did 

18 you mostly use Globex? 

19 MR. BENJAMIN: Ttis is at the end? 

20 BY MS. RYALL: 

21 Q Well, yeah. Let's start at tr.e 

22 beginning. 

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A Well, at the beginning and I think this 

is a gocd pcint because at the beginning, COMEX 

was still at the forefc:-cnt c:= tr.e liquidity. And 

I de recall at the end c:= my time at JP Moc:-gan, 

(b)(4) 

(b)(4) 

(b)(4) 

MR. BENJAMIN: This is the end c::: ycur 

time at Moc:-gan Stanley? 

THE WITNESS: Margan Stanley, ttat's 

what I'm saying, yeah. 

But then scrr.ewr.ere :=rom '06 to '07, you 

~now, tte electronic platforrrs basically ~ust took 

over. And tten really it happened sc fast. Like 

by '08, it was all electronic. (bl(4l 

~-----------~ 

(b)(4) 

(b)(4) . Sc 

it was now pointing and clic:,ing as opposed to 

shouting in orders. So it was a difficult 

transition. 

BY MS. RYAL::..,: 

Q So wr.en you did do your trades on the 

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:=locr, why would you choose to do ttem en tte 

:=locr c:-ather than Globex after Globex carr.e to tr.e 

:=oc:-e:=ront? 

A (b)(4) 

Q Between Globex and tr.e flooc:-? 

A As 1 l(b)(4) I remerr.ber bac:.:;: tc 0 6, 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q Did you use floor bc:-c:,ec:-s? 

A~ 

Q (b)(4) 

[b)(4) I" 

A (b)(4) 

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1 (b)(4) 

2 Q And who is it there that you rr.ostly 

3 dealt with? 

4 A fb)(4) l(b)(7)(C) I 

5 cb_l(_71_(c_1 ___________ J. cfb_l(_'I ______ ~ 

6 b)(7)(C) 

7 b)(7)(C) (b)(4) 

S (b)(4) 

9 Q Uh-huh. 

10 I (b)(7)(C) 

-~---------~' 

d 

an 

11 b)(4) fb)(7)(C) 

12 l(b)(7)(C) 1. 

~--------~ 

b)(4) 

13 (b)(4) 

14 ~ 

15 Q~? 

16 A (b)(4) 

17 Lb_l(_'l ____________________ ~rb)(7)(C) 

1 

18 (b)(7)(C) and the ether one was 

19 -- rb)(4) l\0)(7)(C) 1. I don't 

20 ,(now his last narr.e. Young kid, l(b)(7)(C) I· "jtb_l(_4

1 ___ ~ 

21 l(b)(4) I 

22 Q For gold? 

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A [b)(7)(C) l(b)(4) 

l(b)(7)(C) fb1(4) fb)(7)(C) 

IQ l(b)(6) (b)(7)(C) 

A (b)(6) (b)(7)(C) 

(b)(6) 

fh\f7\fr\ 

Q So did ycu have a relationship, a 

business relationship, with any of these before 

you went to JP Morgan? 

A (b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

l(b)(4) I 

Q Did you eve-:: trade on T0C0M? 

Q Were the prices on TOCOM er in the Asian 

mar:,et generally in:=luential on what ycu were 

doing on a daily basis in New Ycrk? 

A As I remerr.ber, (bl(4l 

(b)(4) 

(b)(4) 

(b)(4) 

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1 and I' 11 use this terrr. -- b)(4) 

(b)(4) 2 

(b)(4) 3 

4 I5 Q Well, how often -

6 A I rr.ean, because basically you' re looking 

7 at (b)(4) . Sc, I rr.ean, l(b)(4) 

~-------------~ 

3 (b)(4) 

~-------------~ 

9 Q And you said you'd get in on cfb_)(_41 ____ ~ 

1 O l(bl(4l How often did that happen? 

11 A (b)(4) 

~---------------~ 

12 (b)(4) 

13 Q So wtat was behind ttose fcb_l(_41 ____ ~~ 

14 \riiec:-e they unusual or -

15 A I just, again, going back to like rr.y 

16 overall style of t~ading, li~e, you ~now, lc~_K_~-~ 

(b)(4) 17 

(b)(4) 18 

(b)(4) 19 

20 (b)(4) 

(b)(4) 21 

b)(4) 22 

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1 (b)(4) 

~----------------------~ 

(b)(4) 2 

3 (b)(4) 

~----------------------~ 

4 Q Did you tave any rrain clients that you 

5 dealt with at JP Morgan? 

6 A Main clients. I think I stated earlier 

7 in my testimony, b)(4l 

~---------------~ 

3 (b)(4) 

~----------------~ 

9 Q Were there any in particulac:- that you 

10 dealt with a lot? 

A fb1(4) 11 ~. 

12 Q So you dealt witt him as a ccunterparty 

13 IT.Ost? 

14 A (b)(4) 

15 ~l(b_)(4_1 ----~1-

16 Q What about outside clients? 

17 A Well, I mean, you kind of got to look at 

18 it in two pieces because before Bear Stearns came, 

1 9 (b)(4) 

~-------------------~ 

l(b)(4) (b)(7)(C) r)(4) 20 

1 

(b)(4) 21 

(b)(4) 22 

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(b)(4) 

Q Sc in talking about COMEX, what de you 

guys as traders call an exctange, actually? 

A The floor. 

Q Yeah, the =i  cr. 

A Tte floo~. 

Q And tr.en r.ow do ycu c:-e:=ec:- to the Globex? 

A Tte screen. 

Q Tte screen. Tte floo~ and the sc~een? 

A Yeah. 

Q It's always good to know those things. 

So what is your understanding a:= hew tr.e 

settlement price is determined in tte silver and 

gold futures contracts for CME? 

A Yeah. I mean, when it became 

electronic, you ~now, tte markets open till -- the 

sc~een is open till 4. So I never ~eally thought 

about it but fc:-crr. wr.at my undec:-standing, it's tr.e 

last minute or two a:= tr.e day tr.ey take the 

average price. 

Q Last rrinute er two of? 

A Of the one. Sc -- so the way it used to 

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1 be en tr.e flooc:-, silvec:- closed at 1:25, gold 

2 closed at 1:30. So I think it's actually the last 

3 rr.inute. So from 1: 24 to 1: 25 they de the average 

4 price of silvec:-, and then tr.ere's a settlement 

5 committee on the flcor. I believe tr.ere still is. 

6 I'm not su--::e. I believe there still is a 

7 settlement committee that convenes eve--::y day on 

8 the closes to decide the settlement price. 

9 Q o:,ay. And the same with gold? 

10 A Sarre with gold. Ttat would be 1:29 to 

11 1:30. 

12 Q Ttat's the flcor trading time? 

13 A Yes. 

14 Q Okay. And since ycu started at JP 

15 Morgan, has this cr.anged at all fc:-crr. wr.en you 

16 started till wten you end? 

1 7 A wr.at do ycu mean, has what changed? 

18 Q During the time period that ycu worked 

19 at JP Morgan, did this process, as you understood 

20 it -A 

21 (b)(4) 

22 Q -- change? 

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135 

1 A (b)(4) 

2 MR. BENJAMIN: Just wait until Ms. Ryall 

3 =inishes asking. 

4 THE \riiITNESS: I'm sorry. I'm soc:-ry 

5 about tr.at. 

6 BY MS. RYALL: 

7 Q It's C:(ay. I was going to add rr.oc:-e to 

8 rr.y question. 

9 MR. BENJAMIN: Ne. Ne. It's c:.:;:ay. It 

10 makes it harder for the court reporte~. 

11 THE WITNESS: I'rr sorry. I apologize. 

12 BY MS. RYAL::..,: 

13 Q You were talking eac:-liec:- about hew~ 

14 (b)(4) 

15 IL(b_l(_41 ______ ~1- \riihat kind of circumstances would 

16 you expect the cutc:-ight :=uture prices tc rise? 

17 A What :,ind of cic:-cumstances would I 

18 , expect prices tc , rise? b)(4) 

~-------------~ 

19 (b)(4) 

20 (b)(4) 

21 (b)(4) 

22 (b)(4) 

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(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q What about just cpen interest oc:- volurr.e 

on the trading itsel:::? 

(b)(4) A 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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l(b)(4) 1. 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q What about intraday; looking at cpen 

interest o~ volurre? 

A (b)(4) 

(b)(4) 

(b)(4) 

Q And you said you traded options while at 

JP Morgan? 

A Yes. 

Q Okay. Can you tell us what a call is? 

A A call is you pu~chase the right to own 

metal, in this case. If the pc:-ice if the 

rr.ac:-ket goes hi gr.er, you puc:-chase -- I'm not giving 

the rigr.t example, but you purcr.ase the rigr.t tc 

be long if the market is in the rr.oney. 

Q And so wtat is a long call tten? 

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A Ttat's being long in cpticn -- being 

long at call. Sc if I purchase a call in gold, 

I'm pu~chasing the right to be long, if on 

settlement day c:= tr.at cpticn geld is over that 

price ttat I purchased. 

Q And what do you call that pc:-ice that you 

puc:-chased? 

A A strike. 

Q o:,ay. And this is the right to be long 

in futures er in physical? 

A Either/or. Yau can trade options on 

:=utures or options en spot. 

Q So if the p~ice a:= tte futu~es or spat 

rises above the st~i~e price, tten you -- ttat 

call would be valuable? 

A Would -- you could ctoose to exercise 

that call. 

Q o:,ay. And a shoc:-t call? 

A The apposite. You sell tte option. Sc 

let's talk about the exarr.ple you ~ust used. If 

you sell a gold call and it's in the money, which 

rreans -- let's pick $1200 and it's eve~ $1200, the 

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139 

stc:-i:,e price at the time of expiry, then you ac:-e 

short metal at that stc:-i:,e price. 

MR. BENJAMIN: And ycu ~eceive ycur 

premium? 

THE \riiITNESS: You receive the pc:-err.ium 

:=rom selling it on day one. 

BY MS. RYALL: 

Q And if you' re in the money, ycu have to 

delivec:-? 

Ar::: ycu'~e out of -- in ttis case, short, 

if you' re out of the money. If you' re sr.ort, 

you're cut a:= tr.e money. If you're long, you're 

in the money, ycu know, but -

MR. BENJAMIN: If you' re short and tr.e 

option is in the money? 

THE WITNESS: Tr.en you r.ave to deliver 

rr.etal. That's wr.at I meant to say, yes. 

BY MS. RYAL::..,: 

Q What about a put? 

A Same exact tr.ing, ~ust c:-evec:-sed. If you 

puc:-chase -- it's the right to be short, if the 

rra~ket is in the money c~ tte strike p~ice. 

(9/15/2010 9:15 AM] Jordan, Christopher - Vol. 1 
140 

1 MR. BENJAMIN: Meaning below the stc:-i:.:;:e 

2 pc:-ice? 

3 THE \riiITNESS: Below the strike price. 

4 BY MS. RYALL: 

5 Q So tr.e put a long put is valuable 

6 when? 

7 A If the mar:,et is below the strike price 

8 at the day of the expiration. 

9 Q And when you say rr.ac:-ket, you rr.ean the 

10 price of the futures o~ the spot? 

11 A Cor~ect. 

12 Q o:,ay. And when is a shoc:-t put valuable? 

13 A A shcrt put is valuable i:= tr.e price is 

14 you sell -- i:= you sell a put, you collect 

15 premium, and if the rr.ac:-ket is net below the stc:-i:,e 

16 price at expiration, then you just collect you~ 

17 premium and you don't deliver any metal. If it's 

18 below tr.e strike pc:-ice, then you have tc be long 

19 to the ether side tr.at bougr.t tr.e put. 

20 Q And did you trade (b)(4) 

~------------~ 

21 irb)(4) 

~----~ 

2 2 A l(b)(4) I 

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Q Okay. Did you trade one mere than the 

otr.er? 

A Generally, as I recall, j{bl(4l ~-----~ 

(b)(4) 

Q Explain what that means. 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q Did you go sr.ort options ever at JP 

Moc:-gan? 

A I thin~ I described -- L~_K_~------~ 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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~l(b_)(4_1 ~I 

Q I'm going to ask you to define scrre 

woc:-ds tr.at I've seen come up in e-mails and IMs -

A Okay. 

Q and what tr.ey mean to you. Spot? 

A It ~ust means physical, two-day value 

rr.etal. 

Q Swap? 

A A swap is a forward --::ate agreerr.ent. 

It's lending or borrowing, in this case, metal 

fc:-crr. one date to a :=  --::ward date. 

Q Forward? 

A Same thing as a swap. I would use that 

generally in the same context. 

Q So descc:-ibe r.ow a lend works. 0--:: the 

components a:= a lend. 

A Well, again, like I was -- just my 

rr.andate was (bl(4l 

b)(4) . But tr.e forward trader would 

~--------~ 

lend -- would have a balance of rr.etal at the end 

of eve--::y day, and he'd r.ave to lend or borc:-cw 

accordingly. 

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I 

So to use an exarr.ple, if you' re short a 

hundred thousand ounces of gold :=oc:- a value two 

days spct, you would have tc borrow rr.etal from 

that day to some otr.er date. You can go two days 

to three days or twc days tc twc years, but it's 

basically ccvec:-ing youc:- balance :=oc:- a spot date 

and rr.oving it forward. 

mean, it gets very intricate. There's 

:=oc:-ward :=oc:-wards where you go from cne forward 

date to anothec:- :=oc:-ward date but, again, that 

wasn't my expec:-tise. 

Q Did you engage in any of that type of 

trading while ycu were at JP Morgan? 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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(b)(4) 

(b)(4) 

Q Did you tave to discuss those particula~ 

transactions with tr.e forward trader before you 

did them? 

A (b)(4) 

(b)(4) I'm 

l(b)(4) just tc:-ying to think of an example. 

(b)(4) 

(b)(4) 

(b)(4) 

Q Can you define spread? 

A Spread. Just the difference between the 

bid and the ask. 

Q Eow about switch? 

A Switch is a futures equivalent of a 

:=oc:-ward. So it's something done on electronic or 

COMEX and tr.ere' s a switch market. So ycu gc fc:-crr. 

-- futures settle mcnth to montr. and each 

commodity had a different mcnth settlements, but 

if you do a switch, :=oc:- example, you' 11 pick Dec 1 

to Dec 2. Dec 2011 to Dec 2012 and the~e's some 

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spc:-ead between those twc months in price which is 

dec:-ived :=rom the interest c:-ate and the golds 

:=oc:-ward rate mar:,et. 

MR. BENJAMIN: Is tr.at something you 

traded? 

THE WITNESS: I traded shoc:-t-terrr.s 

switches. I rr.ay have done scrr.e, but generally 

that wasn't rr.y focus. 

BY MS. RYAL::..,: 

Q Is switct also called a spread itself? 

A Yeah, how it spc:-eads. Yeah, I'm trying 

to think bac~. I haven't been in it in a while. 

Year., spreads and switcr.es are -- yes, in terms of 

COMEX talk, it's the same tting. 

Q o:,ay. And what wculd you be doing if 

you buy a switct? 

Ar::: you buy a switch? God. I've been 

out of the game ::a~ a wtile. You a~e -- if you 

buy. I think you' re buying the front month and 

selling the back month. So e:=fectively the 

example I used, you' re buying metal :=oc:- delivec:-y 

2011. Ycu'c:-e selling metal for delivery 2012. 

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Q Okay. And you said you didn't do this 

very often? 

A Not very often. 

Q (b)(4) 

~---------------------~ 

(b)(4) 

~-------~ ' 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q And does it matter wtether it's due to 

rr.overr.ent in one pac:-t versus the other? 

A Well, again, this isn't my expe~tise but 

:=rom what I understand, (bl(4l 

~----------~ 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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l(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q (b)(4) 0 

A (b)(4) 

(b)(4) 

(b)(4) 

Q And you mentioned this earlier, but dip? 

A Dip. Price gcing lower. 

Q Rally? 

A Price going tigher. 

Q l(b)(4) r 

A (b)(4) 

(b)(4) 

Q (b)(4) 

(b)(4) 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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1 Q Okay. And I've seen ttis in scrre a:= 

2 your 

41 IMs f~b-)(____ ~1? 

3 A That's just a terrr kb)(4) fer L 

4 (b)(4) 

~-----------------------~ 

5 (b)(4) 

~---------------~ 

6 Q You know where tr.at came :=rom? 

7 A I think it carr.e from the :=locr. Thec:-e 's 

8 a bunch. Reading througt my embarrassing e-mails, 

9 there's a bunch of terms that were 

10 :=locr-gene~ated. 

11 Q o:,ay. I want to talk about trading 

12 stc:-ategies err.played at JP Margan for the pc:-ecious 

13 rr.etals group. 

14 A o:,ay. 

15 Q And just in general, :::i~st of all, were 

16 stc:-ategies err.played overall as a gc:-cup er were 

17 they done by boa~ or portfolio? 

18 A Err.m. (b)(4) 

1 9 (b)(4) 

~---------------~ 

2 0 (b)(4) 

21 (b)(4) 

22 (b)(4) 

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(b)(4) 

(b)(4) 

~l(b-)(4_1 ---~I 

Q What about in taking a view c:= tr.e 

rra~ket er trying to rrake money, not necessarily 

off of exactly what you're doing with a client? 

We~e there strategies fer ttat? 

(b)(4) 

A 

~---------------------~ 

(b)(4) 

(b)(4) 

MR. BENJAMIN: And what I tr.ink Ms. 

Ryall is asking is: In app~caching that task, was 

there kind a:= a uniform st~ategy that all tte 

different traders employed er was each trader kind 

of forming tis er her own strategy and tactics? 

THE WITNESS: (b)(4) 

(b)(4) 

BY MS. RYALL: 

Q And SC what (b)(4) ~--------J 

b)(4) 

A l(b)(4) 

ol(bJ(4JI· 

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A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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l(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

Q So I 'rr. getting from you that your basic 

stc:-ategy (bl(4l ? 

~----------~ 

A I mean, b)(4l 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q And hew much c:= wr.at you were doing was 

on a daily basis versus the weekly er even longer 

tec:-m? 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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Q wr.en you say longer term, how long were 

you talking about? 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

MR. BATTAGLIA: Can I as:.:;: a ::allow-up tc 

that? wr.en you describe your tc:-ading strategies 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

THE WITNESS: Li:.:;:e I said earlier, rb)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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1 (b)(4) 

2 b)(4) 

3 (b)(4) 

4 (b)(4) 

s (b)(4) 

6 rb)(4) 

7 b)(4) 

8 (b)(4) 

9 

(b)(4) 

10 MR. BATTAGLIA: So a situation, to use 

11 your word, 4

c::: Lfb_l(_1 ____ ~~ would ycu Lrb-)(-'1 ___ ~1-w uld 

12 you necessarily need to have a custcrre~ to 

13 l(b)(4) 1  r would you actively seek 

14 (b)(4) 

15 (b)(4) 

16 THE WITNESS: ~-

17 MR. BATTAGLIA:~. 

18 THE WITNESS: Ll(b-)(_'1 

____ J But genec:-ally 

(b)(4) 19 

(b)(4) 20 

(b)(4) 21 

b)(4) 22 

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1 (b)(4) 

2 l(b)(4) So you'd just be -- and then I'rr 

3 getting ahead of myself, but then rb)(4l 

4 (b)(4) 

s b)(4) 

6 (b)(4) 

7 (b)(4) 

8 (b)(4) 

9 

(b)(4) 

10 (b)(4) 

11 BY MS. RYAL::..,: 

12 Q Did you tave to discuss you--:: -- what 

13 your strategies we--::e going to be with anyone at JP 

14 Moc:-gan? 

15 A I mean, again, I rr.ean, l

(b)(4) 

. 

16 b)(4) b)(7)(C) (b)(4) 

17 

18 

19 (b)(4) 

20 l(b)(4) 

21 everybody 

22 (b)(4) 

It's di~ficult in that respect. So 

b)(4) 

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I fb)(4) But generally if I took i::: 

(b)(4) 

(b)(4) 

rb)(4) l(b)(7)(C) 

(b)(4) Q So 

b)(4) 

~? 

A (b)(4) 

(b)(4) Q And you said there was 

l(b)(4) I and (b)(4) 

l(b)(4) F 

(b)(4) A 

(b)(4) 

(b)(4) 

l(b)(4) 1t:b)(7

)(C I 0 ~ wr1(I· You knew, (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q Eow c:=ten did you have a significant 

risk? 

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1 rr.ean, genec:-ally I was b)(4

l 

~---------~ 

2 

3 

4 

5 

6 Q And these b)(4l 

~--------------~ 

7 we--::e they in the metals? 

A l(b)(4) 8 I 

9 Q Did ycu ta:,e any in othec:- commodities? 

1 0 A (b)(4) 

11 Lrb_l(_41 __ ~I, I think I said earlier, rb)(4

l 

(b)(4) 12 

(b)(4) 13 

(b)(4) 14 

(b)(4) 15 

(b)(4) 16 

(b)(4) 17 

Q (b)(4) 18 

(b)(4) 19 

(b)(4) 20 

~-------------~ ' 

A (b)(4) 21 

l(b)(4) 22 I 

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1 Q Sc (b)(4) 

b)(4) 2 

3 A Again -Q 

4 -- with clients? 

5 A Sorry. Sorry. I didn't let you finish 

6 again. I'm sor~y. 

7 Again, b)(4) 

~----------------~ 

3 b)(4) 

~---------------------------~ 

9 ~-

10 Q So was tr.ere any way to tell which 

11 trades were actually ~ust b)(4l 

~----------~ 

l(b)(4) I versus (b)(4) ? 12 

~-------------~ 

13 A I mean, didn't we discuss this earlier a 

14 little bit? I tr.ink you can see by my style, when 

(b)(4) 15 

(b)(4) 16 I 

(b)(4) 17 I 

(b)(4) 18 

(b)(4) 

19 

(b)(4) 20 I 

(b)(4) 21 

l(b)(4) 22 

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(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q o:,ay. Did you ever trade in ATFs 

yourself? 

A No, I did not. I believe you needed a 

license :=oc:- that. I never did, though. 

Q Do you have any professional licenses 

cuc:-rently? 

A I do not. 

Q Did you tave any since you started in 

this business? 

A I do not. 

Q Did you eve~ use different strategies 

::a~ silver versus geld? 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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1 MR. BENJAMIN: In terrr.s c:= ycur cvec:-all 

2 big picture st~ategies that you've been 

3 describing? 

4 THE WITNESS: I guess tte best way to 

5 say, (b)(4) 

6 (b)(4) 

7 (b)(4) 

8 (b)(4) 

9 (b)(4) 

10 l(b)(4) 

11 BY MS. RYAL::..,: 

12 Q Did ycu employ any otr.er strategies tr.at 

13 we r.aven 't talked about? 

14 A (b)(4) 

15 (b)(4) 

16 Q b)(4) o:,ay. 

~------------------~ 

17 

18 

19 

20 A (b)(4) 

21 (b)(4) 

22 (b)(4) 

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(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

MR. BENJAMIN: Is it fair tc say that 

the number c:= b)(4l 

~-------------~ 

(b)(4) 

THE WITNESS: rb)(4) 

MR. BENJAMIN: And youc:- job was 

reconfigured? 

THE WITNESS: ~ 

BY MS. RYAL::..,: 

Q I'm going to do cne more topic be:=oc:-e we 

brea:.:;: fer lunch. 

I want to talk to you about EFPs, kind 

of talk about wr.at they are and what the mechanics 

of them are. When ycu say buy an EFP, wr.at do ycu 

rr.ean? wr.at are you functionally doing? 

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A Wten I say buy o~ sell an EFP -

MR. BENJAMIN: Let's start buy. 

THE WITNESS: Buy. I'm buying tf'.e 

futures and I'm selling the equivalent notional 

dollar arr.aunt of spct. 

BY MS. RYALL: 

Q Okay. And how do you deterrr.ine the 

prices that you are willing to do an EFP at? 

A Well, as I said earlier, the EFP is a 

widely brokered instrument. Thc:-ee tc five brokers 

they qucte it. It's dec:-ived :=rom the interest 

rate envirornr.ent and the gold forward curve. So 

b)(4) 

how 

(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) 

b)(4) 

(b)(4) 

Q De you recall generally hew many EFPs 

you had at any given time exchanged? 

A Li~e a position? 

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Q Yes. 

A "f . 1 . ' R5i(4f7 E= ective o~ regu a~ EFP position?L____J 

(b)(4) 

\riihen you say -- b)(4l 

~----------------~ 

(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) 

MR. BENJAMIN: And just to be cleac:-, 

you're speaking now broadly about EFPs to include 

effective EFPs -

THE \riiITNESS: Yes. 

MR. BENJAMIN: -- and actual EFPs? 

THE WITNESS: Yes, I am, and fbl(4l 

(b)(4) 

(b)(4) 

BY MS. RYAL::..,: 

Q o:,ay. So you said (bl(4l 

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(b)(4) 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q Why? \riihy that numbec:-? 

A Well, l(b)(4) that's, you knew, 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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(b)(4) 

(b)(4) 

l(b)(4) 1. ~--~ 

MR. BENJAMIN: In silver? 

THE WITNESS: In silvec:-. 

BY MS. RYAL::..,: 

Q (b)(4) 

~-------------J 

A (b)(4) 

l(b)(4) 

~--~ 

Q So on a daily basis, how are you aware 

of what your position in EFPs was? 

A I'm trying tc remember hew. We get a 

report er at C~edit Suisse we get a report. At JP 

b)(4) Moc:-gan, 

(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) 

Q Is it something you looked at every day? 

A (b)(4) 

(b)(4) 

(b)(4) 

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l Ljtb_l(_,1 ______ ~ 

2 Q So ttere was only about three b~c~e~s 

3 who quoted the EFP? 

4 A I'm trying ta think. The rrain b~c~e~ I 

S remerr.ber is rb)(3)7USC §12(CEA) (b)(4) 

6 l(b)(3) 7 USC §12 (CEA) (b)(4) Then the brokers, 

7 (b)(3)7USC §12 trC:/\\ fh\fA\ we call theml(b)(3)7USC §12(CEA) (b)(4) I 

8 (b)(3)7USC 

~12/CEAl And I think }~lPF had a broker for those. 

9 Q (b)(3)7USC §12 trC:/\\ fh\fA\ is ttat also referred to as 

10 

11 That's it. Yeah (b)(3)7USC §12 • (CEA) (b)(4) 

12 rb)(3) 7 USC §12 (CEA) (b)(4) So there were -- fbl(4l ~-----~ 

13 (b)(4) 

14 (b)(4) 

15 Q Were there any tr.at you tended tc deal 

16 witr. more? 

17 A From what I recall, rb)(3)7USC §12(CEA) (b)(4) 

lS irb)(3)7USC §12(CEA) (b)(4) 

l 9 l(b)(3) 7 USC §12 (CEA) (b)(4) 

20 l(b)(3)7USC §12(CEA) (b)(4) 

21 l(b)(3)7USC §12(CEA) (b)(4) 

22 l(b)(3)7USC §12(CEA) (b)(4) 

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l(b)(3) 7 USC §12 (CEA) (b)(4) I· 

Q Was thec:-e someone at (b)(3)7USC §12 that (CEA) /bl/41 

you dealt with? 

A It was a guy named rb)(4l (b)(7)(C) I· 

~---------~ 

An old floor guy that went upstairs to broker 

EFPs. 

Q Did you know him before r.e went 

upstaic:-s? 

A I knew hirr. from the cld days. Yeah. 

Q wr.at do ycu mean, the old days? 

A Li~e I think at Republic I met him 

:=ic:-st. 

Q Okay. 

A He was on the :=locr. 

Q Did you use hirr ttere? 

A I don't tr.ink so. I don't remerr.ber, but 

I don't think so. 

Q Eow c:=ten did you get up to, you ,(now, 

having the size of EFPs you thought you needed to 

take off? 

A I really don't c:-ecall because that 1(bl(4l 

(b)(4) 

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(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q Can you tell rr.e r.ow posting c:= an EFP 

woc:-ks? 

A Yeah. That comes from the -- the COMEX 

days and actually you still have tc post EFPs, 

even though the :=locr has become rathec:- irc:-elevant 

recently. wr.en you do an EFP, I was told when I 

:=ic:-st joined this business, you had to time stamp 

a ticket and then ycu will give -

MR. BENJAMIN: wr.o 1 s you? 

THE WITNESS: I would. I'd !"'.ave to 

generally. 

BY MS. RYAL::..,: 

Q Ycu at your trading desk? 

A At my trading desk. I would de an EFP 

with either a broker or a custcrr.ec:-. So I wculd 

eitter be net buying futures o~ selling :=utures, 

and the customer would either net be selling -

MR. BENJAMIN: Ycu mean net selling EFP? 

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168 

1 THE \riiITNESS: Buying, yeah, but buying 

2 :=utures or selling futures and net selling the 

3 equivalent. I was gcing to go on. 

4 MR. BENJAMIN: Sorc:-y. 

5 THE WITNESS: Ycu' c:-e net buying or 

6 selling EFPs. Sc you're net. 

7 MR. BENJAMIN: Right. 

8 THE WITNESS: Equal and offsetting 

9 initial amounts. Then ycu have to pest it on the 

10 :=locr. In -- fc:-crr. wr.at I knew, it's in the 

11 trading day -- in ttose trading day hours, and I 

12 can recall vaguely some cic:-cumstances wr.ere you do 

13 an EFP late in the day and you'd have tc post it 

14 the next morning, but it has to be posted dawn en 

15 the :=locr. 

16 And so I would -- typical instance, I'd 

1 7 pick up the phone tc (b)(7)(C) 'Hey, rb)(7)(C) I, rb)(4l 

18 (b)(4) 

19 (b)(4) 

20 (b)(4) 

21 (b)(4) 

22 l(b)(4) I 

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1 BY MS. RYALL: 

2 Q o:,ay. And you said ycu had tc do that 

3 witr.in the same day. Was there any particular 

4 number c:= hcurs that you were c:-eguired to de that 

5 wittin er tirre span? 

6 A I don't -- I don't know thec:-e was any, 

7 like, written c:-ule. I de knew tr.at you r.ad to 

8 post it du~ing COMEX hours 8:20 to 1:30. And if 

9 you did a trade after 1:30, you'd ma:,e sure you 

10 posted it early in the morning the next day. 

11 Q Did JP Margan have any c:-ules about hew 

12 soon you had to put it into your system? 

13 A (b)(4) 

14 Q And by that I rr.eant jtbl(4l I-

(b)(4) 15 A 

b)(4) 16 

17 :b)(4) , ycu know, 'b)(7l(Cl 4

18 :1(b:)( ~1~~~~~======= 

1 9 Q (b)(4) 

2 0 (b)(4) 

21 (b)(4) 

~l(b_)(7_1(_C_I ---~I, ~b)(4) - . l 

~-------------------------~ 

22 ~? 

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1 A rb)(4) 1. 

2 Q Did fb)(7)(C) eve-:: have to do that :=oc:-

3 you? 

4 A~l(b_)(4_1 _____ ~ 

5 Q As a trader, do you pay attention to how 

6 rr.any EFPs are being done by others, if they're 

7 posted anywr.ere? 

8 A (b)(4) 

~--------------~ 

9 (b)(4) 

~---------------------------~ 

10 (bl(4l . I mean, it's public 

11 information. That's why you have to post it. So 

12 you'll r.eac:- sometimes '5,000 EFPs just went up' 

13 and you're like, 'Or., wr.at 41 just happened?' l~(b_l(___ 0 

14 (b)(4) 

15 (b)(4) 

16 (b)(4) 

17 (b)(4) 

18 l(b)(4) 

19 Q They don't announce the price, tr.ougr., 

20 just the numbe--:: of EFPs? 

21 A They -- b)(4l 

~-----------------~ 

22 (b)(4) 

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1 (b)(4) 

(b)(4) 2 

~------------------~ 

3 (b)(4) 

~--------------------------J 

4 l(b)(4) I5 Q So were thec:-e any otr.er reasons that you 

6 would de an EFP in youc:- pac:-ticular trading? 

b)(4) 7 A Again, 

S (b)(4) 

~------------------~ 

9 (b)(4) 

~-------------------------~ 

1 0 (b)(4) 

~-------------------------~ 

11 (b)(4) 

~-------------------------~ 

12 l(b)(4) 

~------~ 

13 Q Did anyone ever come and ask you to 

14 reduce youc:- EFP position? 

15 A I don't -- I don't remember. 

16 MR. BENJAMIN: Meaning his ef=ective, 

17 effective EFP position? 

18 MS. RYA~L: At JP Morgan. Yes. 

19 THE WITNESS: 

=----------~ 

b)(4) 

2 0 (b)(4) 

~------------------------J 

21 (b)(4) 

~--------------------------~ 

22 (b)(4) 

~-------------------------~ 

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1 (b)(4) 

~------------~ 

2 l(b)(4) l\0)(7)(C) l(b)(4) 

3 (b)(4) 

4 (b)(4) 

5 (b)(4) 

6 (b)(4) 

7 BY MS. RYAL::..,: 

8 Q You said cl(b_l(_41 ____ JI· Do you rr.ean -

9 A l(b)(4) ~- I'm so--::ry. Sor--::y 

10 about ttat. 

11 I forget wf'.at that was called. 4 ~rb_l(_1_~ 

12 (b)(4) 

13 (b)(4) 

14 (b)(4) 

15 l

(b)(4) I 

c. ---~. s c 

I b 

remem e--:: l(b)(7)(C) l(b)(4) c. __ _,_, _________ __, 

16 (b)(4) 

1 7 (b)(4) 

18 Q Did you eve-:: rr.ake mar:,ets in EFPs to 

19 clients? 

20 A Before -- the answec:- l(b)(4) I- Before 

21 Bear Stearns, myself and fbl(7J(C) ll(bl(4l 

22 (b)(4) 

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(b)(4) Stearns, 

(b)(4) 

Q And do ycu know what an exchange :=oc:-

swap is? 

A Exchange :=oc:- swap? Ne. 

MR. BATTAGLIA: Can I as.< a ::allow-up on 

the timing c:= tr.e EFPs? Just for your own 

trading, what was tr.e typical delay between when 

you would c:-eview the EFP with ycur counterparty 

and when you would call the broker and r.ave them 

post it on the floor? 

THE WITNESS: Again, (b)(4l 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) I 

b)(4) 

(b)(4) 

(b)(4) 

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(b)(4) 

MR. BATTAGLIA: \riiould tr.ere ever be a 

delay of hours er wculd there be -

b)(4) THE \riiITNESS: 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) 

b)(4) MR. BATTAGLIA: 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) THE WITNESS: 

(b)(4) 

(b)(4) 

MR. CUSIMANO: Just one cne question 

before we gc to lunch. Did you eve-:: execute 

trades in tr.e pit? 

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THE WITNESS: Did I -- was I physically 

in the pit? 

MR. CUSIMANO: No. No. Did you execute 

trades in ycur capacity at JP Morgan througt 

brokers? 

THE WITNESS: ~ 

MR. CUSIMANO: (b)(4) 

~----------~ 

l(b)(4) I" 

THE WITNESS: Well, l(b)(4) 

l(b)(4) IMR. CUSIMANO: l(b)(4) 

l(b)(4) I" 

(b)(4) THE WITNESS: 

(b)(4) 

(b)(4) 

(b)(4) -- were with rr.e at 

Moc:-gan Stanley for eight to 10 yeac:-s. Sc these 

are long-terrr. c:-elationsf'.ips. 

MR. CUSIMANO: So ycu used l(b_l_(4 0 _1 __ ~ 

(b)(4) I · l

c. ---~that you were talking about :=rom the EFP 

transactions? 

THE WITNESS: Ltb_l(_4I ___ ~ 

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1 MR. CUSIMANO: Okay. But you would 

2 execute outrights and spreads? 

3 THE WITNESS: b)(4) 

~-------------~ 

(b)(4) 4 

(b)(4) 5 

(b)(4) 6 

(b)(4) 7 

8 MR. CUSIMANO: o:,ay. 

9 BY MS. RYALL: 

10 Q wr.y did ycu b)(4l 

~---------~ 

11 .~_K_4_1 __ Jratter than doing it elect~cnically? 

12 A (b)(4) 

~--------------------J 

13 (b)(4) 

~-----------------------J 

14 (b)(4) 

~-------------------~ 

15 (b)(4) 

~-------------------------J 

16 (b)(4) 

1 7 MS. RYA::..,L: Anybody else? Okay. ::..,et' s 

18 take an hour bc:-eak for luncr .. Sc we' 11 come back 

19 at about 1:25. We'~e off the record. 

20 (Wtereupon, at 12:24 p.rr., a 

21 luncheon ~ecess was taken.} 

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A F T E R N O O N S E S S I O N 

(1:56 p.m.} 

MS. RYAL::..,: o:,ay. We' 11 go back en tr.e 

record. It's abcut 5 to 2. We teak a lunch 

brea:.:;:. 

\riihereupcn, 

CHRISTOPHER T. JORDAK 

was recalled as a witness, and taving been 

previously duly sworn, was examined and testified 

~u~the~ as follows: 

EXAMINATION BY COUNSEL FOR THE COMMODITY 

FUTURES TRADIKG COMMISSIOK COKTINUED 

BY MS. RYALL: 

Q You were talking eac:-liec:- about your awn 

pe~sonal 4 strategy and ycu talked abcutcl(b_l(__1 ____ ~ 

(b)(4) 0 

~--------------J 

A (Nodding} 

Q (b)(4) 

(b)(4) 

(b)(4) ? 

A Well, as I said, I mean,cl(b_l(_41 __ J 

(b)(4) 

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(b)(4) And as 

I also said ea~lie~ in my testimony, cfb_l(_41 ___ J 

(b)(4) , but my rr.entality has 

~-------------~ 

always been to do tte best possible job =a~ the 

client. 

b)(4) 

(b)(4) 

(b)(4) 

Q To trade witr. the client? 

A (b)(4) 

(b)(4) 

Q o:,ay. So (bl(4l 

(b)(4) 

l(b)(4) 

A Well, (b)(4l 

~---------------~ 

(b)(4) 

(b)(4) 

Q Uh-huh. 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q When you're covering the risk oc:- trying 

to execute for client, are you -- hew lcng do ycu 

sit there watching to see wtere the price is going 

or do ycu just do it immediately? 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

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(b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

(b)(4) . I'm sorc:-y. 

~-------------~ 

Q It's okay. 

A All right. 

Q So cculd it r.appen tr.at you would be 

selling when the mar:,et is going down? 

A (b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

QI want ta tal~ about the business of JP 

Mo~gan pre-Bea~ Stearns ve~sus a=ter Bear Stea~ns. 

A o:,ay. 

Q I want tc knew wr.at the difference were. 

Can you :,ind of describe what tr.e business was in 

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the precious metals group was li:,e before Bear 

Stearns? 

A Sure. The biggest dif=e~ence -- and I 

thin~ I said this earlier in my testimony was 

that the mar:,et had not gone electc:-cnic when I 

=i~st joined, and tte opening up of the electronic 

ability and the ETFs allowed customers much rr.oc:-e 

readily -- much rr.oc:-e availability tc tc:-ade these 

clients. (bl(4l 

(b)(4) 

So rr.y first few years thec:-e, l(bl(4l 

(b)(4) 

(b)(4) 

(b)(4) . As it went electronic in 

'07 and '08, b)(4l 

(b)(4) 

and when Bear Steac:-ns actually got integrated into 

ouc:- group, so '08 and '09, (bl(4l 

~-----------~ 

(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

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(b)(4) 

(b)(4) 

(b)(4) (b)(7)(C) 

(b)(4) 

Q What about tr.e culture or the atmospf'.ere 

at the desk before and a:=ter? 

A (b)(4) 

(b)(4) 

Q Before Bear Stearns? 

A Before Bear Stearns. The addition of 

Bear Stearns, ycu know, (bl(4l 

~------------~ 

(b)(4) 

l~(b_l(_71_(c_1 ___ ~I, who I had mentioned eac:-liec:-. Lrb_l(_4_1 ___ J 

(b)(4) 

D And, yeah, I mean, I just thin:<~ 

(b)(4) 

. The ETF wasn't a part c:= it. ~----------" 

So I think (b)(4l 

(b)(4) 

(b)(4) , i:= ttat makes sense. 

~----------~ 

Q Was thec:-e any tension between the 

traders once the Bear Stea~ns traders carre eve~? 

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1 A I don't ~ecall tension. I recall it 

2 being a very amicable thing at the start. And it 

3 was a big group hug :=oc:- the :=ic:-st, you know, 

4 couple montr.s, but I would say that -- I mean, I 

5 would 4

say Lb_l(__1 ----------------~· So I 

6 :<ind of -- b)(4l ~----------J as I described 

7 ea~lie~. But I wouldn't describe it as tension, 

8 no. 

9 Q Now, fb)(3)7USC§12(CEA)(b)(4) 

10 (b)(3) 7 USC §12 (CEA) (b)(4) 

11 cl(b_l(_31_7_u_s_c_§_12_(_c_EA_l_(_bl_('_I -~f? 

12 A l(b)(3)7USC §12(CEA) (b)(4) 

13 l(b)(3)7USC §12(CEA) (b)(4) 

14 irb)(3)7USC §12(CEA) (b)(4) 

15 l(b)(3)7USC §12(CEA) (b)(4) 

16 "jtb_l(_31_'_u_s_c_§_12_(_c_eA_l_(_bl_('_l __ ~I17 Q o:,ay. My next question wculd be: (bl(3l 7 I I C: ('_ 

18 (b)(3) 7 USC §12 (CEA) (b)(4) 

1 9 l(b)(4) I" 

2 0 A l(b)(4) I21 MR. PENICK: \riihen ,·ou 

1 sa,: .1 b)(3)7USC §12 rC:/\\ fh\fA\ 

22 l(b)(3) 7 USC §12 (CEA) (b)(4) 

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l l(b)(3) 7 USC §12 (CEA) (b)(4) 

2 THE kb)(3) 7 USC §12 (CEA) (b)(4) WITNESS: L 

3 l(b)(3) 7 us C §12 (CEA) (b)(4) 1-

4 BY MS. RYAL::..,: 

5 Q What -- what advantages did JP Mcrgan 

6 have as a participant in the pc:-ecious metals 

7 rr.ac:-ket? 

8 A A=ter the merge~ or just in general? 

9 \riihat advantages? 

10 Q Before and afte~. 

11 A The thing I know about JP Morgan -- and 

12 this is :=rom my time at Moc:-gan Stanley --l(bl(4l ~-~ 

13 (b)(4) 

14 (b)(4) 

15 (b)(4) 

16 (b)(4) 

17 (b)(4) 

18 l(b)(4) I 

19 They were known, I vaguely recall, l(b_l(_4_l_ 0 0 

20 (b)(4) 

21 (b)(4) 

22 (b)(4) 

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(b)(4) 

And the otr.er advantage, I rr.ean, fb_l(_4_1 --~ 0

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q Did any c:= tr.at change aftec:- Bear 

Stearns? 

Q So just in ycur trading, being a trader 

:=oc:- JP Morgan, what advantages did you feel you 

had that otr.er participants rr.aybe didn't have? 

A Well, I think I stated earlier, t"b-1(_41_~ 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

l(bl(4

l 1. Tf'.e advantages that I had by going ~----~ 

there from Morgan Stanley, I don't see any. I 

don't see any. 

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(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q So hew was ttat -- hew did you see ttat? 

How was it communicated to you -

A Well -Q 

__ (b)(4) 

A Hew was it comrr.unicated? cl(b_l(_4_1 ______ ~ 

(b)(4) 

(b)(4) 

(b)(4) 

c~_K_4_1 _________ ~and, you know, it kind of was 

one I ~ust c:-err.ember vaguely conversations with 

b)(7)( (b)(4) 

I 

b)(4) 

(b)(4) 

(b)(4) 

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Ll(b_)(4_1 ___ ~ 

Q And you said they bc:-cught you over tc do 

a certain be or r.ave a b)(4) 

l~(bl_('l ____ ~I" 

A~. 

Q wr.at does that mean? 

A Tr.at means, I guess, the way I had a 

reputation as being very fair to clients. Like 

being (bl(4l 

~-----------------------~ 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

MR. BENJAMIN: When you say tLb_l(_41 ____ ~ 

you rr.ean give narrow bid offer spreads? 

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THE \riiITNESS: b)(4l 

~------------~ 

b)(4) 

~-------------------~ 

~. 

BY MS. RYAL::..,: 

Q Did ycu see an increase in their client 

base because of that? 

A (b)(4) 

rb)(4) I 

Q Did you eve~ execute orders at tte -speci~ically 

orders in tte futu~es market at 

di~ecticns c~ any othe~ traders? 

A b)(4) 

~-------------------~ 

fb1(4) 1-

Q So was anyone regularly saying, can you 

do this or that? 

A What do you mean? 

Q Telling you, you ,(now, please go and do, 

like get the hundred futures contract? 

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A (b)(4) 

::..,ike, (b)(4l 

~----------------------" 

rb)(4) r)(7)(C) rb)(4) 

(b)(4) 

b)(4) 

b)(4) 

b)(4) 

Q I've seen some 

4 e-rr.ails Lrb_l(_I ______ ~ 

(b)(4) 

A Eere's wtat tappened. 

Q b)(4) 

b)(4) 

~fb1_(4_1 --~I ~ 

A Try tc -

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,-., b)(4) ' 

A b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

Q And whec:-e was that? Eow was that :,ept? 

A b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

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Q And tr.en what would happen with tr.ose? 

A b)(4) 

~---------------~ 

b)(4) 

(b)(4) b)(7)(C) 

b)(4) 

Q That you wanted to get dcne? 

A Well, (b)(4l 

~----------------~ 

b)(4) 

Q So if you b)(4) 

~------------~ 

b)(4) 

b)(4) 

b)(4) ? ~----------------J 

A b)(4) 

b)(4) 

b)(4) 

b)(4) 

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b)(4) 

l(b)(4) l(b)(7)(C) (b)(4) 

b)(4) 

b)(4) 

Q Back to back? 

A (b)(4) 

Q A flat de you mean? 

A Well, (b)(4l 

~------------~ 

rb)(4) i. 

Q o:,ay. 

A Now, Lrb_l(_,_1 ____ ~ -- and I know you 

didn't ask this, b)(4) 

b)(4) 

(b)(4) 

b)(4) 

Q Did you eve~ do spot transactions on 

your own initiative ratr.er than :=rom a client 

request? 

A rb)(4) I 

Q o:,ay. What wculd be the purpose? 

A b)(4) 

b)(4) 

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1 l(b)(4) (b)(7)(C) wb)(4) 1

2 rb)(4) fb)(7)(C) 11(0)(4) 

3 

b)(4) 4 

5 

f5R4n 6 L__J 

7 Q What would prompt that? 

tb)(4) 8 A I mean, like I said is l 

9 

10 

11 

12 

13 

14 

15 rb)(4) I- ~-------~ 

16 Q Was thec:-e a way that you could put 

17 orders in fer Globex that would possibly t~ade 

18 overnigr.t wr.en you weren't actually at work? 

1 9 A b)(4) 

~-------------------~ 

7 2 0 ~rb)( )(C) 1-- ~b-)(_41 ________________ ~ 

21 b)(4) 

b)(4) 22 

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b)(4) , but li:.:;:e I 

said, I wasn't very good with tte electronics. 

Q Wtat kind of size did you generally de 

when you were trading on Glcbex or in tr.e pit? 

A Just generally like in terrrs c~ overall 

position o~ in terms of -

Q Lets, I guess. 

A -- lot size per transaction? 

Q Yes. 

A b)(4) 

(b)(4) 

(b)(4) 

MR. BENJAMIN: And you' re speaking now 

of the trading you did -

THE \riiITNESS: crb_l(_4I ___ ~ 

MR. BENJAMIN: -- on a proprietary basis 

as apposed to hedging customer transactions? 

THE WITNESS: Well, cl(b_l(_4_1 ______ ~ 

(b)(4) 

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b)(4) 

b)(4) 

MS. MAN::..,EY: And what size generally 

we--::e customer trades? 

THE WITNESS: Again, (bl(4l 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

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1 MS. MANLEY: Than:.:;: ycu. 

2 THE \riiITNESS: Sure. 

3 BY MS. RYALL: 

4 Q Eow many lots would you trade on a given 

5 day, ~ust gene~ally? 

6 A fb)(4) you ,(now, li:,e as I 

7 described my style earlier, b)(4) 

~-------~ 

8 

9 

10 

b)(4) 11 

b)(4) 12 

13 Q And is tr.at including pc:-cprietac:-y and 

14 client? 

15 A~ 

Q (b)(4) 16 

A l(b)(4) 17 1-

18 Q Is that silver o~ gold o~ bott? 

19 A (b)(4) 

(b)(4) 20 

(b)(4) 21 

b)(4) 22 

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(b)(4) 

Lfb_)(4_) ---~ 

Q Eow much effect do ycu tr.ink your 

individual trading tad en tte pricing of the 

=utures contracts? 

A b)(4) 

Q wr.y? 

A (b)(4) 

Lrb_l(_41 _______ ~I• I rr.entioned earlier about the 

EFPs. I rr.ean, tr.is brought a whole different 

group of liquidity to our wcrld that, wr.ich I 

believe is why all these mar:,ets have gene 

st~aight up in the last =ive years and will 

continue to go a lot highe~, but -- and also 

there's a ccrr.munity called the algorithm comrr.unity 

which, I mean, I don't know who's behind that or 

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who -- you know, they' c:-e obviously matherr.atical 

wizards. 

But you'd see, like, tr.e Euro go up and 

then you'd see -- I always thought it was a 

computer pc:-cgram that wculd trac:.:;: Euro versus geld 

or crude versus gold. Sc what I noticed was the 

rr.ac:-kets got rr.ucr. thicker in general. 

Q What do you mean by thick? 

A Just liquidity. Like you couldn't -ycu 

couldn't move tf'.e market. Li:.:;:e rb)(4) 

~-----~ 

b)(4) 

1 Lrb_l(_'_______ JI· ::..,ike when it used tc be the 

COMEX, the cpen outcry, you had rr.ucr. less of a 

scope or an idea of what liquidity is out tr.ere, 

but when you loc:.:;: at it electronically, crb_l_(4_1 __ J 

b)(4) 

(b)(4) 

b)(4) 

Q Hew much e:=fect de you think youc:-

individual trading r.ad en tr.e prices of or the 

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differentials of the EFP? 

A b)(4) 

(b)(4) 

b)(4) 

Q wr.at do ycu mean ~-----~ b)(4) ? 

A Like the way the brokers would quote it 

is like a 10 cent spread usually, and I :=ound tr.at 

b)(4) 

c~_K_4_1 _______ ~1· Ttere we~e people willing to do 

bott sides. 

So liquidity in the EFP mar:,et I found 

b)(4) to be tremendous, 

b)(4) 

Q Did you eve~ put in a bid offer with a 

broker in orde~ to show your view? 

A In outrights or EFPs? 

Q Either. 

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1 b)(4) 

2 b)(4) 

3 Q At JP Morgan, were ycu aware of the 

4 rr.overr.ents of physical metals in and out of JP 

5 Mo~gan's vault in Lendon? 

6 A b)(4) 

b)(4) fb1(7)(C) 

and, ycu know, (bl(4l 

12 ~fb_)(4_1 ____ ~ 

13 Q So b)(4) , wr.at did 

14 you do each day? 

15 A Each day -Q 

16 How did you watch it and then -A 

1 7 ::..,ike I said eac:-liec:- in my testimony, l(bl(4l 

18 b)(4) 

19 

20 

21 b)(4) 

22 b)(4) 

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b)(4) 

b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

b)(4) 

fb1(4) 

MR. BENJAMIN: In ycur e:::fective EFP 

position? 

THE \riiITNESS: ~ I' IT. talking tea 

rr.ucr .. I'rr. scrry. 

BY MS. RYALL: 

QI just had a question in my mind and 

it's gene. 

A Oh. 

Q Eow do ycu know what your P&L was at any 

given tirr.e youc:- own pec:-sonal? 

A rb)(4l I was a tremendous system and ~ 

b)(4) 

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b)(4) 

(b)(4) 

b)(4) 

l~(b-l(_,1 ____ " 

Q Was the~e a P&L -- I guess ttey called 

it -- budget that ycu had? 

A b)(4) 

b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

Q In a year? 

A~ 

Q In your individual 0b~)(~4) ________ ~ 

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--

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A l(b)(4) and fbl(4) I 

Q Oh, C:(ay. And was there any pools oc 

did anything happen if you went youc:- P&L went 

down by a certain amount? 

A b)(4) 

b)(4) 

b)(4) 

(b)(4) 

(b)(4) 0 

Q Uh-huh. 

b)(4) A 

(b)(4) 

b)(4) 

(b)(4) 

fb)(4) I 

Q So if your budget was? 

A b)(4) 

b)(4) 

Q b)(4) 

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~ 

A b)(4) 

b)(4) 

b)(4) 

Q Did they ~eep t~ack c~ ~isk parameters 

like a bar? 

A b)(4) 

Q Was it scrr.etr.ing that you had to thin:< 

about on a daily basis? 

A rb)(4) I 

'\ R5iTT-. '-" b!J.._f 

A I thin~ I stated earlier in my 

testimony, (bl(4l 

~-------------~ 

b)(4) 

Q Yau said you were ~ocused a let on 

(b)(4) 

A ~-

b)(4) 

Q 0 

(b)(4) A 

b)(4) 

b)(4) 

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b)(4) 

rb)(4) IQ What do you mean b)(4) 0 

b)(4) 

b)(4) 

A b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

b)(4) 

b)(4) 

rb)(4) 

Q Did the financial cc:-isis in late 2008 

affect youc:- trading? 

A Did it af:=ect my trading? I don't 

remerr.ber. I don't c:-err.ember. 

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Q Hew was ycur style of trading different 

:=rom the otr.er guys on youc:- bench in Kew Yor:,, 

l

(b)(7)(C) like Mc:-. or Mc:-. irb)(7)(C) f ~--~ 

A Well, first c::: all, cfb_l(____ 

41 ~1, 

Lrb_l(_,1 __ ~1, and (b)(7)(C) L(b-1(_'1--------------~ 

(b)(4) But I was -- I 

described my style earlier as (bl(4l ~---------" 

b)(4) 

(b)(7)(C) (b)(4) 

Lrb_)(4_1 -----~I- And l~/(71(1(b)(4) 

b)(4) 

(b)(4) 

Q Did Mr. rb)(7J(C) ~- did his option 

positions ever come intc play with the way you er 

Mr - l(b)(7)(C) were trading? 

A b)(4) I mean, l(bl(7J(C) 

b)(4) 

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b)(4) 

(b)(4) 

Q b)(4) 0 

~----------" 

A~. 

Q Just in you--:: opinion as a tc:-adec:-, how 

does the size of a -- a lot size of a trade affect 

the price on the mar:,et? 

A b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

rb)(4) 

Q Were there any certain considerations 

you had to think abcut when you we--::e doing a large 

lot size? 

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1 A (b)(4) 

~--------------------" 

2 

3 

4 

5 

6 

7 

8 Q Again, wten you say large for customers, 

9 it was like? 

1 0 A b)(4) 

11 

12 

13 

14 

15 

16 

17 b)(4) 

18 b)(4) 

19 b)(4) 

20 fb)(4) 

21 Q What about just the fact of putting up 

22 tb)(4) say, Globex o~ can you do it all at 

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once? 

b)(4) A 

b)(4) 

b)(4) 

Q What does that mean? 

A b)(4) 

(b)(4) 

b)(4) 

b)(4) 

fb1(4) That's the way I tr.ougr.t. 

Q b)(4) 

(b)(4) ' 

A b)(4) 

tb)(4) 

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Q Okay. 

41 A You know, so that --cl(b-)(_______ ~ 

(b)(4) 

b)(4) 

(b)(4) 

b)(4) 

rb)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q So it could take you a wtile to cover 

that client? 

A b)(4) 

Q And so (b)(4l 

(b)(4) 

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1 A Again, (b)(4) 

2 b)(4) 

3 

4 

5 

6 Generally. 

7 Q Can you cancel an o~der in Globex? 

8 A l(b)(4) I· 

9 Q Okay. Did you ever do that? 

10 MS. MANLEY: Can you describe the 

11 p~ccess for canceling an orde~? Sorry. 

12 THE WITNESS: I 'rr. trying to remerr.ber it. 

13 You point and -- the way I remembec:- :=roml(bl(41, which 

14 was the last system I used, which was tr.e Globex 

15 system -

16 BY MS. RYALL: 

17 Q And ttat's the interface with Globex 

18 that t~ade~s use? 

1 9 A b)(4) 

~--------------~ 

20 

21 

22 b)(4) 

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MS. 

b)(4) 

MAN::..,EY: b)(4) 

b)(4) 0 

THE WITNESS: l(b)(4) 

b)(4) 

MS. 

b)(4) 

MAN::..,EY: b)(4) 

b)(4) 0 

b)(4) 

(b)(4) 0 

THE 

MS. 

b)(4) 

THE 

MS. 

b)(4) 

WITNESS:~-

MAN::..,EY: (b)(4) So, 

WITNESS: ur.-hur .. 

b)(4) MAN::..,EY: 

okay? 

THE WITNESS: (b)(4) 

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~. 

MS. MAN::..,EY: b)(4) 

rb)(4) I. 

THE WITNESS: Okay. 

MS. MAN::..,EY: b)(4) 

b)(4) 

(b)(4) 

b)(4) 

fb)(4) 1, 

THE WITNESS: (b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

b)(4) 

fb1(4) IMS. MANLEY: (b)(4) 

b)(4) 

b)(4) 

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THE \riiITNESS: b)(4

l 

~------------~ 

BY MS. RYAL::..,: 

b)(4) Q 

A Well, (b)(4) 

b)(4) 

b)(4) 

MR. BENJAMIN: b)(4) 

~----------~ 

b)(4) 

(b)(4) 

THE WITNESS: IL(b_)(_41 ______ 0 

BY MS. RYALL: 

Q (b)(4) 

b)(4) 

A l(b)(4) IMR. SCHROEDER: b)(4) 

Lrb_)(4_)_~~? (b)(4) 

THE \riiITNESS: Well, j{bl(4l 

~-------~ 

b)(4) 

MR. BATTAGLIA: Mind if I follow up? 

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You just described(bl(4

l 

~----------------~ 

(b)(4) 

b)(4) 0 

~---------------------~ 

THE WITNESS: IL(b_l(_41 _______ ~ 

MR. BENJAMIN: Can I ask? I'rr. scrry. 

Just to rr.ake sure I'rr. cleac:- on the question. You 

b)(4) rr.ean 

~l(b_)(4_1 ___ ~1" 

MR. BATTAGLIA: b)(4) 

~----------~ 

b)(4) 

MR. BENJAMIN: o:,ay. 

MR. BATTAGLIA: b)(4) 

~------------~ 

(b)(4) 

b)(4) 

Lfb_)(4_1 --~lo 

MR. BENJAMIN: Why don't you take tf'.ose 

one at a time. 

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THE [b)(4) \riiITNESS: In 

(b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

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(b)(4) 

fb1(4) 

MR. BATTAGLIA: b)(4) 

~------------~ 

b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

THE WITNESS: Well, b)(4) 

~----------~ 

b)(4) 

b)(4) 

MR. BATTAGLIA: That generally seemed. 

So in ycur mind, in your opinion, ttat was a size 

a sizable oc:-der? 

THE WITNESS: jtbJ(4)1? 

MR. BATTAGLIA: (b)(4) 

in the silver market I think your example was, er 

was that gold? 

THE WITNESS: (b)(4) 

~----------~ 

b)(4) 

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1 b)(4) 

2 l(b)(4) 

3 MR. BATTAGLIA: Could ycu give an 

4 example, in your opinion, wtat a sizable o~der 

5 would be in a geld er a silver EFP market? Just 

6 your opinion. 

7 THE WITNESS: I rr.ean, (b)(4) 

~--------~ 

8 b)(4) 

9 b)(4) 

10 MR. BATTAGLIA: Bott? 

11 THE WITNESS:~. 

12 MR. BATTAGLIA: Than:.:;: ycu. 

13 BY MS. RYAL::..,: 

14 Q In either mar:,et? 

15 A fb)(4) 1-

16 Q And you said b)(4l 

~--------~ 

was a 

17 la~ge customer crder? 

18 A~ 

19 Q In geld? 

2 0 A Lrb_l(_,1 __ ~ 

21 Q So hew many lots would be sizable to you 

22 in silver? 

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A (b)(4) 

Q [bJ(3) 7 USC §12 (CEA) (b)(4) 

l(b)(3) 7 USC §12 (CEA) (b)(4) 

(b)(3)7USC §12(CEA)? 

/bl/41 · 

A [b)(3) 7 USC §12 (CEA) (b)(4) 

[b)(3) 7 USC §12 (CEA) (b)(4) 

[b)(3) 7 USC §12 (CEA) (b)(4) 

[b)(3) 7 USC §12 (CEA) (b)(4) 

[b)(3) 7 USC §12 (CEA) (b)(4) 

b)(3) 7 USC §12 (CEA) (b)(4) 

[b)(3) 7 USC §12 (CEA) (b)(4) 

[bJ(3) 7 USC §12 (CEA) (b)(4) 

l(b)(3) 7 USC §12 (CEA) (b)(4) 

rb)(3) 7 USC §12 (CEA) (b)(4) 

[b)(3) 7 USC §12 (CEA) (b)(4) 

[b)(3) 7 USC §12 (CEA) (b)(4) 

[bJ(3) 7 USC §12 (CEA) (b)(4) 

Q [b)(3) 7 USC §12 (CEA) (b)(4) 

[b)(3) 7 USC §12 (CEA) (b)(4) 

[b)(3) 7 USC §12 (CEA) (b)(4) 

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1 A Again, (b)(4l ~-----------------" 

2 

3 

4 

5 Q When you we--::e tc:-ading futures on the 

6 excr.ange, did ycu have any control eve--:: which FCM 

7 account your t--::ades got placed into? 

8 A What is FCM? 

9 Q Like at JP Morgan. 

10 MS. MAN::..,EY: Futures comrr.ission. 

11 BY MS. RYAL::..,: 

12 Q Futures commission merchant account 

13 where tr.at would hold tr.e futuc:-es ccntc:-acts? 

14 A I've never heard that terrr. be:=oc:-e. 

15 

16 

17 

18 c~_K_4_1_,I• So I don't know tow that relates to FCM. 

19 Q O~ay. So we're aware of the--::e having 

20 been some of these accounts, and I can just tell 

21 you two of the numbers and see i:= ycu c:-ecognize 

22 them. 

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1 7 

18 

19 

20 

21 

22 

A ur.-hur .. 

Q fb1(4) f 

A l(b)(4) I 

Q fb1(4) I" 

A b)(4) 

MR. BENJAMIN: (b)(4) 

~--------~ 

b)(4) 

THE WITNESS: IL(b_l(_'I ___ ~ 

BY MS. RYAL::..,: 

Q When you we--::e inputting EFPs intc the 

b)(4) was the--::e a 

to put in tr.e actual time tr.at you made the 

A b)(4) 

b)(4) 

b)(4) 

~ 

~---------------------~· 

like I said, I think I said eac:-liec:- in my 

b)(4) testimony, 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

field 

deal? 

Ad 

n 

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(b)(4) 

b)(4) 

Q Did the internal system show or record 

if a t~ade was done on the floor rathe~ than 

Globex? 

A b)(4) 

b)(4) 

b)(4) Q 

tb)(4) b 

A (b)(4) 

(b)(4) 

b)(4) 

rb)(4) l(b)(7)(C) l(b)(4) 

b)(4) 

-Q 

l(b)(4) 

A Was tr.at it? 

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1 MR. BENJAMIN: I thin:.:;: sc. 

2 THE WITNESS: (b)(4) 

~----------~ 

3 b)(4) 

4 (b)(4) 

5 rb)(4) I 

6 BY MS. RYAL::..,: 

7 Q Sc b)(4) 

8 b)(4) 

9 A (b)(4) 

10 rb)(4) I11 MS. RYA::..,1: ::..,et's just take a few 

12 rr.inutes brea:<. Thec:-e's an exhibit I want to show 

13 and it's being copied. 

14 MR. BENJAMIN: o:,ay. 

15 THE WITNESS: Ne pc:-cblem. 

16 MS. RYA::..,L: Off the record. 

17 (Recess) 

18 MS. RYA::..,1: Back on the record. 

19 BY MS. RYAL::..,: 

20 QI have two small topics I want ta cover 

21 before we get tc this exhibit. 

22 A o:,ay. 

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Q Tte first thing is is: How did you 

generally communicate with other traders outside 

of JP Morgan? 

A Outside c= JP Morgan? 

MR. BENJAMIN: You mean customers? 

BY MS. RYAL::..,: 

Q Custcrr.ec:-s. 

A b)(4) 

b)(4) 

b)(4) 

kb)(4) I L . I corr.mun -- generally ccrr.municate ~-------~ 

witt f~iends and stu=f like that on the phone or 

on chats, Bloomberg Chats. 

Q And r.ow did you communicate with other 

traders at JP Morgan? 

l

(b)(4) A In Lendon, li~e I said,. 

b)(4) 

b)(4) 

b)(4) 

Q Did you r.ave any traders who you 

regulac:-ly discussed rr.ac:-ket conditions with outside 

of JP Margan? Net necessarily scrr.eone tr.at you 

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1 traded with, but anybody. 

2 A I mean, I had f~iends that I talked to 

3 outside, but I wouldn't say they were c:-eally 

4 involved in rr.y markets. Year .. 

5 Q Were there any traders outside of JP 

6 Moc:-gan that you would discuss wr.at you were 

7 trading witt? 

8 A I would mainly, as I recall, give my 

9 opinions to, you knew, and I would categorize 

10 these people as =riends, not really traders pe~ 

11 se. 

12 Q Are thec:-e any tc:-adec:-s that ycu c:-egularly 

13 gave advice, tc:-ading advice, to while ycu were at 

14 JP Morgan? 

15 A Again, I can't c:-eally say advice, but I 

16 have opinions on the mar:,ets. Sc I'd usually 

1 7 offer my opinions. 

18 Q Did you eve~ offer as your opinion a 

19 view that was opposite to wr.at you actually had? 

20 A I don't remembe~. I tonestly don't 

21 remerr.ber the ans wee:- to that. I know there's a let 

22 of loose language and exaggerations involved with 

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spea~ing to people, but I gene--::ally would li~e to 

believe that I would usually tell people my views 

and rigr.t or wc:-cng. 

Q Did you eve-:: tell any  tr.er traders er 

anyone outside c:= JP Morgan what you planned to 

trade? 

A That's -- again, I don't exactly 

remerr.ber that. But that's another way of ~ust 

giving you--:: opinion. So I would say rr.ost of it 

was loose talk to desc--::ibe an opinion you have en 

the rr.ac:-ket. 

MR. SMITH: \riihen you say exaggeration, 

what do you rr.ean? 

THE WITNESS: Well, there's a few 

:=riends, you knew, I have ttat, you ~now, just you 

have to :,now the relationship we had with each 

other. It's oneupmanship, bravado, and I have 

this size position and I have ttis size position, 

but it's very tcngue in chee:.:;:. Just chat amcngst 

:=riends. 

MR. SMITH: Which friends wculd those 

be? Any in particular? 

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1 THE WITNESS: The twc that I can thin:.:;: 

2 of is, you ,(now, my best friend fc:-crr. college, 

3 cfb_l(_71_(c_1 _____ I, 0 and the ether that I thin:< of is 

4 "rb_l(_7

_1(C_l ____ ~I• Andrb)(7)(C)I and I went tc scr.ool 

5 together and ac:-e very friendly. And cfb_l(_7_1(_c_1 __ ~I, 

6 who's just a young kid that interviewed wi tr. my 

7 :=ic:-m, wr.o I just have a ve--::y clcse friendship 

s wi tr .. 

9 MR. SMITH: This would be over the phone 

10 or -

11 THE WITNESS: Both. But I would say the 

12 rrajcrity was, from what I --::ecall, was ttem calling 

13 rr.e and, you :,now, b)(4) 

~----------------~ 

14 

15 , ~------------~ 

and tr.en you r.ave a few 

16 :=riends at the bottcrr. tr.at you look up at every 

17 now and then and ~ust give some chatte--::. 

18 BY MS. RYAL::..,: 

19 Q So hew did you -- you . d Sal kb)(7)(C) I c[ _____ Jwas 

20 interviewed by you--:: :=ic:-m and you became :=riends 

21 after ttat? 

22 A I was -- I was introduced to him by a 

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1 =riend named ~{(7)(~ Lrb_l(_7l_(C_I ____ JI• I didn't mention 

2 him. He's another good friend of mine ttat I 

3 woc:-ked with at Morgan Stanley, but l(bl(7J(C) I knew 

4 rb)(7)(C)I well and c:-eally thought very highly of him. 

5 He's a young kid, I believe just out of college a 

6 =ew years, and r.e wanted to get on a tc:-ading des:<. 

7 So te inte--::viewed at Morgan Stanley -- JP Margan 

8 and he didn't get a job there, but -- and tr.en I 

9 -- I would say I helped him get a jab at his next 

10 place of wor:,, First Kew Yor:< Secuc:-ities, wr.ere I 

11 just gave a ve--::y goad c:-eview of what I thought r.is 

12 abilities were. 

13 Q Do you socialize witt any of these 

14 thc:-ee; b)(7)(C) 

~-----------------~ 

15 A Yes. 

16 Q All  = ttem? 

1 7 A Yes. 

18 Q o:,ay. How often do ycu see tr.em? 

19 ::..,et' s start wi tr. Mc:-. l(bl(7J(C) 1-

20 A Yeah. I mean, (bl(7J(C) is pc:-cbably my 

21 closest ~riend in tte group. You knew, te's vec:-y 

22 kb)(6) (b)(7)(C) close tc my ~amily. l 

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b)(6) (b)(7)(C) 

b)(6) (b)(7)(C) . So he's very 

~-------------~ 

:=riendly with l(b)(7J(C) I p~cbably talk to hirr 

th~ee ta five tirres a week and see tim once a 

rr.onth, r.opefully. 

7 cl(b-1(__1(C_l __ ~I would call me regularly, as I 

recall, and I saw hirr less regularly. Maybe a 

couple times a yea~ but, you knew, I'd talk to tim 

via chat. 

And fbl(7)(C) and I used ta be, you 

:,now, used to gc out a lot. rb)(B) (b)(7)(C) 

b)(6) (b)(7)(C) actually, and 

that didn't woc:-k out well fer hirr .. So I didn't 

see him after tr.at. But no. r~b-)(-B)_(_b_)(l_l_(C_l _______ a 

b)(6) (b)(7)(C) . But anyway, yes, 

~-----------------~ 

we're all very friendly. 

Q Is ttere anyone at your trading desk 

that you socialized witt a lot? 

A I mean, not that I ~eally recall. I 

rr.ean, I'd say I was probably clcsest with (bl(7J(C) 

just because we have similar families and kids, 

but generally othec:-wise it was cnly if thec:-e was, 

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like, a group function. 

Q O~ay. I want to go back to tte bonuses 

a little bit. At the time tr.at you were at JP 

Moc:-gan, was any pac:-t of your bonus discreticnac:-y 

to you~ supervisors? 

A~ 

b)(4) 

Q 

b)(4) 

~? 

A It's ~ind of like -- the way I always 

understood it, b)(4l 

Q Who told you that? 

A I believe when I was hic:-ed, I remember 

(b)(7)( b)(4) 

Cl 

b)(4) 

b)(4) 

b)(4) 

Q And so (b)(4l 

(b)(4) 

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A We 11, b)(4) 

~--------------~ 

b)(4) 

Q So it wasn't b)(4l that 

41 you could that ycu wculd get aboutcfb_l(_____ J 

fb1(4) lo 

A b)(4) 

~-------J 

Q And when did they determinecl(b_l(_41 ___ ~ 

b)(4) ? Like 

what date wculd they lac:< at it? 

A Again, (b)(4l 

b)(4) 

Q Uh-huh. 

A b)(4) 

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b)(4) 

Q When was it usually paid? 

A b)(4) 

b)(4) 

b)(4) 

b)(4) 

MR. BATTAGLIA: \riiec:-e these public 

numbers? You said b)(4) . Would 

they ~ust be your desk er wculd it be othec:- JP 

Mo~gan metal des~s included in the~e? 

4 THE WITNESS: As I remembec:-, Ljtb_l_(_1 __ J 

(b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

~. 

BY MS. RYAL::..,: 

Q Sc b)(4) 

~------------------" 

b)(4) ? 

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A b)(4) 

b)(4) 

(b)(4) 

b)(4) 

Q So tr.e first two years ycu l(bl(4l ~--~ 

b)(4) 

Did you get rr.oc:-e than tr.at as a bonus? 

A fb)(4) I 

Q o:,ay. And then tr.e tr.ird year, wr.at did 

you get? 

A o:,ay. The third yea--::, now that's when 

the Bear Stearns integc:-ation happened, and fb_l(_4_1 

0

__ ~ 

b)(4) , and I hcpe I 

~------------------~ 

conveyed earlier that I was ve--::y upset by tr.at 

and, you knew, disheartened I guess would be the 

woc:-d. 

So what happened, as I recall it, was 

rb)(7)(C) l(b)(4) 

b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

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(b)(4) 1 

2 Blah blah blar.. b)(4) 

(b)(4) 3 

(b)(4) 4 

~---------------------~ 

S b)(4) (b)(6) 

6 Lrb_l(_,1 ____ ~ 

7 Q Uh-huh. 

8 A b)(4) 

~----------------~ 

b)(4) 9 

~------------------------~ 

1 0 b)(4) 

~-----------------------~ 

11 (bl(4l . So I ~ust c:-err.ember that. 

~----------~ 

12 (b)(4) , that was in 2008 

~------------J 

13 when the cc:-ash r.appened and banks did horribly. 

b)(4) 14 

b)(4) 15 

16 So what I was told at the end c~ ttat 

17 year by fbl(7)(C) I and 1~{(7)(1 was -- rLb-)(4_1 ______ ~ 

18 

19 

20 

21 

b)(4) 22 

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1 (b)(4) 

2 b)(4) I just really liked 

3 wo~king ::a~ these guys. I laved being a pa~t of 

4 this gc:-cup. 

5 So I ~ecall saying something ta the 

6 effect a:= 'I leave it in your hands, )~\(71 Yau 

7 ~now, I just -- I want to work for you forever. I 

8 rr.ean, de what ycu want to de. ' 

9 (b)(4) (b)(6) 

10 b)(4) 

11 b)(4) (b)(6) 

12 fb1(4) 

13 Q Then you left the end of 2009; ~ight? 

14 A Yeah. 

15 Q Did ycu get a bonus fer tr.at yeac:-? 

16 A l(b)(4) I17 Q Okay. kbl(4l h ~L ____ ~f 

18 A l(b)(4) (b)(6) 1-

19 Q And wr.at was the base salary? 

2 0 A l(b)(4) 1· 

21 Q Sc your total was 

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Q And wr.at was based on =a~ that 

year? 

A From what I was told was, l(b_l_(4 0 _1 ____ ~ 

b)(4) 

b)(4) 

b)(4) 

[bl(4l 1-- what I was told. 

MS. RYA::..,L: Okay. Tf'.is is -- I'm going 

to rra~k this as Exhibit 2 and it's actually in 

thc:-ee parts. So we can do 2A, B and C. 

(Jordan Exhibit No. 2 was rr.ac:-ked 

for identification.) 

BY MS. RYAL::..,: 

Q All right. Sc for the record, this is 

one exhibit and we r.ave it in tr.ree pac:-ts. The 

Bates nurr.ber for the entire exhibit is JPM-AG 

00271889. Part A goes from page 1 tc page 9, part 

B gees through page 10 through page 22, and pac:-t C 

goes f~crr page 23 ta page 38. 

If you could ta~e a few minutes to look 

th~cugh that. 

A Sure. 

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MR. BENJAMIN: Hang en. Just take a 

minute. 

BY MS. RYAL::..,: 

Q Take your time. 

A Okay. 

Q Sc I will represent ta you that ttis 

actually is a tard copy of an Excel file ttat was 

pc:-cduced tc us by JP Margan. 

A o:,ay. 

Q And the name that they gave it is 

" b)(4) 

~----------J 

A Okay. 

Q -- fer tte close of business on October 

lStr .. " And the Bates numbec:- that they gave us 

when they produced this is the one I mentioned, 

and when we printed the hac:-d copy, we had tr.e 

Bates nurr.ber pc:-inted come out p~inted on the 

top and then the tab oc:- sheet narr.e -

A Yeah. 

Q -- in Excel printed en tte bottom. Sc 

on the first page, you see summary at tr.e bottom. 

That was the tab. 

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1 A or., okay. 

2 Q And we tried to print these to ma:,e them 

3 as easy as possible to follow, but sometimes these 

4 Excel spreadsheets are so big. 

5 Okay. My first guest ion was going to 

6 be: Do you recognize this? 

7 A No, I do not. 

8 Q o:,ay. It's net scrr.etr.ing you would have 

9 seen at -- you saw at JP Morgan? 

10 A I don't recognize seeing something li~e 

11 this, nc. 

12 Q b)(4) 

~--------------------~ 

13 (b)(4) 

14 A b)(4) 

15 (b)(4) 

16 

17 

18 Q 0 . ,(ay. c ,_,o you • d sai b)(4) 

19 b)(4) right? 

2 0 A ~t:b_)(4_1_~ 

21 Q b)(4) 

22 

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(b)(4) A Yeah. There was 

Q Uh-huh. 

A But I don't remembec:-. l(b)(4) 

b)(4) 

b)(4) 

fb1(4) IQ Uh-huh. 

b)(4) A And then 

b)(4) 

b)(4) 

fb1(4) 

Q Do ycu ~ecall it being a lengthy 

spc:-eadsf'.eet? 

A b)(4) 

(b)(4) 

b)(4) 

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MS. RYAL::..,: I want tc mar:< tr.is as 

Exhibit 3. 

( Jordan Exhibit Ne. 3 was marked 

=a~ identification.} 

BY MS. RYAL::..,: 

Q I' rr. handing ycu wr.at' s been marked as 

Exhibit 3. 

A Uh-huh. 

Q And ta:,e a few minutes to look at that. 

A Okay. 

MR. CUSIMANO: Have you moved off this? 

MS. RYAL::..,: Ee said r.e had nevec:- seen it 

before. 

MR. CUSIMANO: I just want tc ask. 

Could you move to page 4 of the first part of 

that? 

THE WITNESS: Exhibit 2A? 

MR. CUSIMANO: Yes, 2A. 

THE WITNESS: Yeah. 

MR. CUSIMANO: Is tr.at what your~ 

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would display or loo~ li~e? That it would be a 

report in ttat format? 

THE WITNESS: (b)(4) 

~-------------~ 

lb)(4) wb)(7)(C) r)(4) 

(b)(4) 

b)(4) 

b)(4) 

(b)(4) 

MR. CUSIMANO: o:.:;:ay. I was wondering. 

\riie're leaking fer it. If it was something sirr.ilar 

to that or something completely different. 

THE WITNESS: l(b)(4ll 

BY MS. RYAL::..,: 

Q When you looked through each page of 

Exhibit 2, did any of tr.em look familiar to you 

that you may have seen in another format oc:- in 

anothec:- place? 

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1 A On page 3. 

2 MR. BEKJAMIN: This is of Exhibit 2A? 

3 THE WITNESS: Yeah. On page 3, that was 

4 because b)(4l 

5 (b)(4) 

6 that you have categorized here. 

7 BY MS. RYAL::..,: 

8 Q Uh-huh. 

9 A I would just have -- I would just loo~ 

10 at the (b)(4) 

11 b)(4) 

12 

13 

14 

15 

16 b)(4) 

17 Q And that's wf'.at you would see in rb)(4) 

18 A That's wf'.at I would see 

4 inrbl( l just 

19 b)(4) 

2 0 Q When you would see it in t:bJ(4l I, the 

21 negative numbe~s o~ the positive numbe~s, 

22 they represent? 

r 

to 

wtat did 

(9/15/2010 9:15 AM] Jordan, Christopher - Vol. 1 
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1 A (b)(4) 

2 Q Lets er ounces? 

3 A (b)(4) 

~-----------~ 

4 Q In f~b_)(4_1 ___ ~P5 A Sc I believe. b)(4l 

~-------------~ 

b)(4) 6 

7 b)(4) 

(b)(4) 8 

9 Q Wtich is silver? 

10 A b)(4) 

11 (b)(4) . So I'd see like -- gosr., 

12 I c:-eally am having trouble remembec:-ing, butl(bl(4

ll 

13 

14 

15 b)(4) 

b)(4) 16 

17 Q o:,ay. 

18 MR. BENJAMIN: And just =a~ the record, 

19 the witness is pointing to page 3 c:= Exhibit 2A 

20 and indicating the left-hand, tr.e tr.ree colurr.ns on 

21 the left of the page. 

22 THE WITNESS: Ot, I thin~ it's the 

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BY MS. RYAL::..,: 

Q ur.-hur .. 

A (b)(4) 

(b)(4) 

MR. BENJAMIN: Sc it looks li:.:;:e it had 

all the -- as ycu c:-err.ember it, (bl(4l 

~------~ 

b)(4) 

kb)(4) I cl _______ J' as best you can recall? 

THE WITNESS: As best I can recall 

because, I mean, I was a spct trader. fb_l(_4_1_J 0 

b)(4) 

BY MS. RYAL::..,: 

Q Do any of the otr.er pages lac:< farr.iliar 

to you? 

Al(b)(I. 

Q Okay. 

Arb)(4) I 

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rroment to look at ttat. 

A b)(4) 

b)(4) 

~. 

Q Do ycu --::ecognize this document? 

A b)(4) 

b)(4) 

b)(4) 

Q o:,ay. This appears tc be an e-mail sent 

on October 16, 2009 to multiple JP Morgan -

A Yes. 

Q -- employees, including youc:-self? 

A Yes. 

Q o:,ay. And this says "Subject: 

b)(4) 

A~ 

Q And it appears tc have attacr.rr.ents tc 

it. (b)(4) 

~------------------------~ 

b)(4) 

b)(4) . This is what you 

we--::e tal:dng about that b)(4) 

~-----------~ 

b)(4) ? 

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A (b)(4) 

b)(4) 

b)(4) . So - ~--------~ 

Q Okay. 

A -- as I remembec:- it, (b)(4) 

~--------~ 

r)(7)(C) fb1(4) I b)(4) 

b)(4) 

Q When did you give that? 

A b)(4) 

Q Okay. 

A -- (b)(4) 

~-------------------~ 

b)(4) 

~ike I was describing earlier incfb_l(_41 _____ ~ 

b)(4) 

fb1(4) 

1-

Q Eow did you give him the number? 

A b)(4) 

b)(4) 

b)(4) (b)(7)(C) 

(b)(4) 

b)(4) 

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1 

2 

3 Q So if something would come up on your 

4 P&L, would you e-mail ttat screen ta him o~ what 

5 did you do? 

6 A b)(4) 

7 l(b)(4) 

8 Q o:,ay. 

9 A b)(4) 

10 b)(4) 

11 Q Okay. 

12 A (b)(4) 

13 b)(4) 

14 Q o:,ay. And this says ,1(b)(4) . 

15 Lfb_l(_4

_1 ____ ~I" wr.at is provisional; do ycu 

16 remerr.ber? 

1 7 A b)(4) 

18 

19 

20 

21 Q Do ycu ~ecall -- the attachments aren't 

22 actually included on this e-rrail. 

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A ur.-hur .. 

Q But do ycu ~ecall these names here on 

the attachment line, "c(b_)_(4_1 ________ 0 "" 

A b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

Q You mean the chart sr.own in the middle 

of the e-mail ycu'c:-e saying was grabbed :=rom the 

Excel spreadsheets that we~e attached? 

A fb)(4) IQ So did ycu leak at tte actual attached 

spc:-eadsf'.eets when ycu get tr.is? 

A b)(4) 

~---------------------~ 

b)(4) 

~-----------------------~ 

Lfb_l(_41 _____ ~ 

Q o:,ay. Well, take rr.e through the chac:-ts 

that a~e actually stown in this e-mail and show rre 

which tr.ings relate to you. 

A On page 1, tr.e nurr.ber that I was always 

looking at was -

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Q Pard me. Let me just for the record, 

this is a two-page exhibit. 

A Oh. 

Q At tte bottom on the =i~st page it has 

the Bates nurr.ber JPM-AG 00157471 and the next is 

157472. So you said page 1? 

A Page 1. b)(4) 

~----------~ 

Ltb~)(4_) -~I. 

Q O~ay. And that's on the left colurrn? 

A Upper left. 

Q o:,ay. And that was ycu? 

A b)(4) 

fb1(4) I 

Q o:,ay. 

A l(b)(7)(C) l(b)(4) rb)(4) 

l(b)(4) fb)(7)(C) rb)(4) 

r1(7)(C) l(b)(4) 

b)(4) 

Q o:,ay. 

A So ttat's really, you knew, what I'd 

look at. (bl(4l 

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1 b)(4) 

2 Q Going down ttis column, you didn't look 

3 at any c~ tte othe~s? 

4 A b)(4) 

5 b)(4) 

6 b)(4) 

7 b)(4) 

8 (b)(4) 

9 

10 b)(4) 

11 (b)(4) 

12 

13 

14 

15 Lrb_)(4_1 _____ ~ 

16 (b)(4) 

~--------------------~ 

1 7 b)(4) 

18 b)(4) So -

19 Q Okay. So en page 2 on the left-hand 

20 side, it has the second colurr.n eve~ says "~ 

21 b)(4) " Is that wr.at you' re leaking 

22 at? 

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1 A Yes. 

2 Q o:,ay. So which one of the names under 

3 that column relate to ycu? 

A " b)(4) 4 " 

5 Q o:,ay. Any otr.ers? 

A b)(4) 6 

7 Q o:,ay. And so none of the ones under 

b)(4) 8 

9 relate to ycu? 

10 A :bJ(4l and I (b)(4l 

'h1/71/(;1 ' ~-------------~ 

11 ~ __ r~b-)(7_1_(c_1 __ ~ ttat we stared. I don't 

12 ,(now where that is in here. \riie -- wr.en I'm saying 

(b)(4) 13 

14 

15 

16 

l(b)(7)(C) 17 

18 

19 

20 b)(4) 

(b)(4) 21 

22 

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1 Q Okay. So when you're looking en page 1 

b)(4) 2 at the spot it shows 

b)(4) 3 

~------------~ ' 

4 A rb)(4) . 

1 

5 Q I= tr.ere' s all tr.ese people whose 

b)(4) 6 , what does this tell 

~--------------~ 

7 you when you're looking at it about your tc:-ading? 

8 A Well, (b)(4l 

9 Q ur.-hur .. 

A __ (b)(4) 10 

~-------------------~ 

11 

12 

13 Q O~ay. And where are you seeing ttat? 

14 A I'm seeing ttat en page 2. 

15 Q Uh-huh. 

16 A I think that's tte .~_l_~_I ___ ~ 

1 7 Q So tr.at' s under the thic:-d column :=rom 

18 the left, ".fb_l(-41 _____ ~1"? 

19 A Let me just look. Because this is -ttis 

20 is something I used to look at. I just 

21 haven't in a long tirr.e. Give me a second. l(bl(4l ~--" 

b)(4) 22 

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D· So -

Q wr.ich number? \riihat 's the column 

heading? 

A The column heading? fbl(4l 

~-------~ 

b)(4) okay? 

Q o:,ay. 

A b)(4) 

b)(4) 

Q o= October 15th? 

A !(b)(4) IQ Okay. And then the otter columns tere? 

A I'rr just trying ta see this. 

Q Did you look at ttose on a daily basis? 

A b)(4) 

(b)(4) 

rb)(4) I· 

Q You see the~e's a column second in from 

the rigr.t tr.at says 'fLb_l(_41 _____ ~t•? 

A~ 

Q Do ycu know what that means? 

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1 A (b)(4) 

2 b)(4) - I 'IT. 

3 not suc:-e is the answer, (bl(4l 

~--------~ 

4 b)(4) 

s 

6 

7 ~ 

8 Q From the day before? 

9 A b)(4) 

10 fb)(4) I· 

11 MS. RYA::..,1: Do your.ave any questions, 

12 Russ? Okay. I tr.ink we're gcing to stop there 

13 :=oc:- the day. We're going to come in tomorrow at 9 

14 o'clock and it will not be a full day tcrr.oc:-row. 

15 THE WITNESS: Okay. 

16 MS. RYA::..,1: Tomer row. Sc we' 11 go of:: 

1 7 the record now and resume tcrr.oc:-row at 9. 

18 (Wf'.ereupon, at 3:36 p.m., the 

19 testimony c::: CERISTOPHER JORDAN was 

20 continued.} 

21 * * * * * 

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255 

CERTIFICATE OF NOTARY PUBLIC 

I, Cac:-leton J. Anderson, III de hereby cec:-tify 

that the witness whose testirrony appea--::s in the 

:=oc:-egoing hearing was duly swoc:-n by rr.e; that the 

testimony of said witness was ta:,en by me and 

thereafter reduced to print under my direction; 

that said deposition is a true record of the 

testimony given by said witness; that I am neitter 

counsel :=o--::, related to, nor employed by any of 

the pac:-ties to the action in which these 

proceedings we--::e taken; and, furtherrr.oc:-e, tr.at I 

am neitr.er a relative or employee of any attorney 

or counsel err.played by the parties r.ereto, nor 

:=inancially or otherwise interested in the cutccrre 

of this action. 

/s/Ca--::leton J. Anderson, III 

Kotary Public# 351998 

in and =a~ the Commonwealtt of Vi~ginia 

My Commissicn Expi~es: 

Noverr.ber 30, 2012 

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256 

ERRATA SHEET FOR TEE DEPOSITION OF 

Case Narr.e: 

CORRECTIONS 

Pg. ~n. Now Reads Stould Read Reasons: 

Reviewed by: Date: 

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To the Witness: 

Please note any e~rors and the 

co~rections thereof, on this e~rata sheet. Any 

change er correction should have a reason. It may 

be a general reason, such as "Tc correct 

stenog~aphic e~ror," o~ ''To clarify the record," 

or "To conform with the :=acts." Once you have 

completed tte steet, signed and dated it, ~etu~n 

the sheet ta your atto~ney, not to the cou~t 

reporting agency. Attoc:-neys should exchange 

erc:-ata sheets among the pac:-ties. 

(9/15/2010 9:15 AM] Jordan, Christopher - Vol. 1 
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Jordan, Christopher - Vol. 2 

9/16/2010 9:16 AM 
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--------------------------------x 

In the Matter c=: 

SILVER PRICES. 

: Vclume 2 

--------------------------------x 

Washington, D.C. 

Thursday, Septembec:- 16, 2010 

Continued Testimony of 

CHRISTOPHER JORDAN 

a witness, recalled :=oc:- :=uc:-thec:- examination by 

counsel :=oc:- Commodity Futuc:-es Trading Corr.mission, 

pu~suant to notice and agreerrent of counsel, 

continuing at approximately 9:16 a.m., at tte 

offices of the Commodity Futures Tc:-ading 

Commission, 1155 21st Street, NW., Washington, 

D.C., be:::o~e Monica A. Voo~tees of Anderson Court 

Reporting, notary public in and ::a~ the District 

of Columbia, when were present en behalf of the 

pac:-ties: 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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APPEARANCES: 

On behalf c:= Ccrr.modity Futures Trading 

Commission: 

EUGEKE SMITH, ESQUIRE 

CHRISTINE M. RYA::..,L, ESQUIRE 

PATRICIA GOMERSA::..,L, Senior Investigato~ 

JEREMY J. CUSIMANO, Adviso~ to Directo~ 

MICEAEL A. PEKICK, Senior Economist 

JORDOK GRIMM, Surveillance Econcrr.ist 

RUSSELL BATTAGLIA, Econcrr.ist 

Division of Enforcement 

Commodity Futuc:-es Trading Corr.mission 

1155 21st Street, NW. 

Wastington, D.C. 20581 

(202) 418-5420 

On behal::: of Witness: 

JAMES J. BENJAMIK, JR., ESQUIRE 

CHRISTOPHER M. EGLESOK, ESQUIRE 

Akin Gump Strauss Haue~ & Feld, ::..,1p 

One Bryant Park 

New Yo~k, New Yark 10036 

(212) 872-1000 

On behal::: of J.P. Margan: 

wr1::..,rAM SCEROEDER, ESQUIRE 

DAVID M. so1::..,0RS, ESQUIRE 

Sullivan & Cromwell, LLP 

125 Broad Street 

New Yo~k, New Yark 10004-2498 

(212) 558-4721 

Also P~esent: 

GLENK EOFFERBER, CME Group 

* * * * * 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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CONTENTS 

EXAMINATION BY: PAGE 

Counsel =a~ CFTC 261 

JORDAK EXHIBITS: 

No. 4 - Docurr.ent, Bates Stamped No. 

JPM-AG 208619-208623269 

No. 5 - Docurr.ent, Bates Stamped No. 

JPM-AG 00209214-209218282 

No. 6 - Docurr.ent, Bates Stamped No. 

JPM-AG 00217633-217635307 

No. 7 - Docurr.ent, Bates Stamped No. 

JPM-AG 00217759-217762319 

No. 8 - Docurr.ent, Bates Stamped No. 

JPM-AG 00218164-218167340 

No. 9 - Docurr.ent, Bates Stamped No. 

JPM-AG 00220442-00220444355 

No. 10 Document, Bates Starr.ped Ko. -

JPM-AG 00236501-236505370 

No. 11 Document, Bates Starr.ped Ko. -

JPM-AG 00236596-236597381 

No. 12 Document, Bates Starr.ped Ko. -

JPM-AG 00237733385 

No. 13 Document, Bates Starr.ped Ko. -

JPM-AG 00237747389 

No. 14 Document, Bates Starr.ped Ko. -

JPM-AG 00208612-208618401 

' ' ' ' ' 

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1 P R O C E E D I N G S 

2 \riihereupcn, 

3 CHRISTOPHER T. JORDAK 

4 was recalled as a witness, and taving been 

5 previously duly sworn, was examined and testified 

6 :::u~the~ as follows: 

7 EXAMIKATION BY COUNSEL FOR THE COMMODITY 

8 FUTURES TRADIKG COMMISSIOK COKTINUED 

9 BY MS. RYALL: 

10 Q Back on the record and we're in the 

11 continuation of the testimony of Christopher 

12 Joc:-dan and I want tc remind you that you ac:-e still 

13 under oath from yesterday. 

14 A o:,ay. 

15 Q De you understand that? 

16 A Yes, I do. 

1 7 Q And fer tr.e c:-ecoc:-d, I'd li:,e to identi:=y 

18 who is he~e today and I'll start with mysel:::. 

19 Christine Ryall, lead trial attorney 

20 witr. the division of enforcerr.ent at the CFTC, and 

21 I' 11 let my colleagues intc:-cduce their.selves. 

22 MS. GOMERSA::..,L: Trish Gcrr.ec:-sall, senioc:-

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22 

s 

investigator. 

MR. SMITH: Eugene Srr.itr., attoc:-ney. 

MR. PENICK: Mike Penick, senior 

economist, a=fice of the chief econcrrist. 

MR. BATTAGLIA: Russ Battaglia, 

economist, division of enforcement. 

MR. GRIMM: Jo~dan Grimm, economist in 

the division of rr.ac:-ket cvec:-sight. 

MR. CUSIMANO: Jeremy Cusimano, 

economist, enforcement. 

MR. HOFFERBER: Glen Hof=e~ber, 

associate director a= CME market surveillance. 

MS. RYA::..,1: Okay. And your attorneys, 

I' 11 let therr. introduce themselves. 

MR. BENJAMIN: Thank you. Jirr. Ben~amin 

and Chc:-is Eglescn, A:,in Gump Strauss Hauer and 

Feld, appearing on behal= of M~. Jordan. 

MR. SCEROEDER: William E. Schc:-ceder and 

David Sollors on betalf of J.P. Mo~gan from 

Sullivan and C~crr.well, L::..,P. 

BY MS. RYAL::..,: 

QI have a couple questions I want to go 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 thc:-cugh witr. you before we get into the exhibits 

2 which are youc:- IMs and E-mails. 

3 A o:,ay. 

4 Q Could you distinguisr. for us between a 

5 :: ~ward transaction in bullion and a forex swap in 

6 silver er geld? 

7 A Do ycu mean like a futuc:-es, like a swap 

8 done on the :=utures excr.ange versus a forward? 

9 Q No. I think you talked yesterday about 

10 EBS. 

11 A EBS wculd just be a spot transaction. 

12 So the difference, a spot transaction en EBS is 

13 the same as a, b)(4l 

14 tb)(4) I cl ______ ~, wr.ich rr.eans tr.ey settle in twc days 

15 value. So if I traded today, in two business days 

16 :=oc:-ward, you'd settle tr.e metal. 

1 7 And distinguisr. that between a :=utures 

18 transaction? 

19 Q Ne. Forward, just a forward transaction 

20 in bullion. 

21 A A :=oc:-ward transaction, generally I 

22 remember a :=oc:-ward as, as this, a spot transaction 

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is done and :=rom my experience, a customer would 

ask to push the spot date tc a forward date. 

So you do a spct trade and then they'd 

say I'd like to, and the terrr we use was roll it 

out; I'd like ta roll ttat cut a wee~, a month er 

:=ive years. 

And then ycu would, there is a ve--::y 

brokered mar:,et of gold :=oc:-ward rates, cne montr., 

two rr.onth, all the way to five yeac:-s. And ycu 

b)(4) 

b)(4) 

So instead of a spat transaction, now I 

have a trade that's going ta not settle in two 

days, but in one wee:.:. and it's going to be at a 

little more of a pc:-err.ium value. 

MS. RYA::..,1: Did you have something else 

in mind? 

MR. CUSIMANO: In tte OTC context, are 

you :=amiliar with tr.e term forex swap? 

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THE WITNESS: Forex swap I'm not 

:=amiliar with. 

MR. CUSIMANO: Relating to bullion. 

THE WITNESS: Fcrex swap, I don't know 

what that means, to be r.onest. When :=oc:-ex, I 

always think of :=oc:-eign excr.ange. 

MR. CUSIMANO: When you say the spot 

rate, is that an overnight rate? 

THE WITNESS: Tte spot rate is just the 

rate that ycu traded that deal with. It's net an 

overnigtt ~ate. 

(b)(4) 

b)(4) 

(b)(4) 

b)(4) 

MR. BENJAMIN: When you say spot rate, 

you basically mean the price -

THE WITNESS: That tte transaction -

MR. BENJAMIN: -- at which tf'.e spot 

transaction -

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THE WITNESS: Toe~ place. 

MR. BENJAMIN: -- teak place? 

THE WITNESS: Yes. 

MR. CUSIMANO: o:,ay. 

BY MS. RYAL::..,: 

Q And the next thing I wanted to as~ you, 

are you :=amiliar fc:-crr. your days at J.P. Moc:-gan 

(b)(4) 

A b)(4) 

b)(4) 

b)(4) 

Q b)(4) 

A b)(4) 

b)(4) 

fb1(4) 

Q r::: we loc:.:;:ed at transaction data :=oc:-

your tc:-ades on a particulac:- day and we found~ 

b)(4) 

b)(4) 

A b)(4) 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 Q (b)(4) 

2 A Pcrtfclios. 

3 Q Okay. 

4 A And I 'rr. net pcsitive about this, but I 

5 believe these l(bl(4l I Mr. fbl(7)(C) 1· s ~----~ 

6 fbl(4) I· I'm not suc:-e, but genec:-ally I ~-------~ 

7 would, I don't recall ever entering anything fc:-crr. 

8 rr.y port intc these ports. 

9 Q So assume that we saw (b)(4) ~------J 

b)(4) 10 

11 MR. CUSIMANO: ~rb_l('_I _J1

. 

12 BY MS. RYAL::..,: 

13 Q b)(4) 

~---------------------~ 

4 14 rb)( l I, wr.y wculd that happen? 

A b)(4) 15 

b)(4) 16 

17 MR. CUSIMANO: Do ycu know somebody by 

18 the last name or f~crr tte Fall c~ 2009 at J.P. 

19 Moc:-gan with the last name fbl(7J(C) 

20 THE WITNESS: Ne, I do not. 

21 MR. CUSIMANO: o:,ay. Do you :(DOW how 

22 you, well, are you familiac:- witr. the spat trading 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 or cash trading st~ategies at J.P. Morgan? 

2 THE WITNESS: (b)(4) 

3 (b)(4) 

4 b)(4) 

5 b)(4) 

6 fb1(4) I 

7 In te~ms of the forwa~d strategies, I 

8 didn't r.ave too rr.ucr. visibility intc that 

9 business. 

10 MR. CUSIMANO: Are you able to 

11 distinguish ~o~ rre the difference between a cast 

12 position and an overnigtt position? 

13 THE WITNESS: Ne. Ne, I 'rr. net. 

14 MR. CUSIMANO: o:,ay. 

15 BY MS. RYAL::..,: 

16 Q Are you, do you recall scrr.eone wf'.ile you 

1 7 woc:-ked at J.P. Morgan of the name of the first 

18 initial~ last name l(bl(7J(C) I? 

19 A fbl(7)(C) I· fbl(7)(C) I, no, I do net. 

2 0 MS. RYAL::..,: o:,ay. We are going tc mar:< 

21 an exhibit. 

22 \riie' 11 rr.ac:-k this as Nurr.ber 4. 

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( Jordan Exhibit Ne. 4 was marked 

=a~ identification.} 

BY MS. RYALL: 

Q And cculd you take some tirr.e to c:-ead 

througt that, please. 

A Yes, thank you. 

Q Fer tte ~eco~d, ttis is a =ive-page 

extibit and on the =i~st page en tte bottom 

rigtt-hand corner ttere's a bates JPM-AG 00208619 

and the last page is 208623. 

Do you recognize ttis document? 

A I do. 

Q Wtat is it? 

A It, I don't ~ecall having this exact 

conve~saticn, but I interpret it tc be a 

conversation I r.ad with rr.y friend cl(b_l(_7_1(_C_l ____ ~I en 

August 19th, 2008, sta~ting at 11:49 a.m. 

Q And is ttis via Bloombe~g instant chat? 

A This would be the Bloomberg IM, I 

believe. That's usually how we communicated. 

Q And is tr.is a document tr.at you reviewed 

in preparation for testirr.ony? 

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A Yes, it is. 

Q O~ay. I'd like ta first direct your 

attention on the first page to the bottcrr., the 

last line at time stamp 16:04:25, wr.ere you say -well, 

can you take me thc:-cugh what you' re talking 

about here? 

A I will ~ead it, first of all. L~_K_~-~ 

Q What did you rr.ean by that? 

A First of all, I don't remember having 

this convec:-saticn with Mr. j{bl(7J(C) land as I 

described yesterday, first a= all, the 

embarrassment of reading my =o~mer E-mails, that 

the relationship I r.ad with a few of the guys I 

rr.entioned yesterday involved a lot a:= bravado, 

tongue-in-cteek trader talk and exagge~ation. 

b)(4) 

~--------------------~ 

b)(4) 

b)(4) 

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b)(4) 1 

fb1(4) 2 1-

3 That's how I can intec:-pret that today. 

4 Q Did ycu frequently use the word~? 

A (b)(4) 5 

(b)(4) 6 

b)(4) 7 

8 ~fbl_('_I -~I 

9 That's all it means to rr.e right now. 

Q (b)(4) ? 10 

~----------~ 

11 A (b)(4l 

12 (b)(4) 

~--------~ 

Q rb)(3) 7 USC §12 (CEA) (b)(4) 13 I 

l(b)(3) 7 USC §12 (CEA) (b)(4) 14 1-

15 A Yes. 

16 Q wr.ich rr.ac:-ket is it tal:dng abcut? 

17 A Well, tb)(3)7USC §12(CEA) (b)(4) 

lS rb)(3)7USC §12(CEA) (b)(4) 

l fb)(3) 7 USC §12 (CEA) (b)(4) 9 

20 (b)(3)7USC §12(CEA) (b)(4) 

fb)(3)7USC §12(CEA) (b)(4) 21 

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1 rb)(3) 7 USC §12 (CEA) (b)(4) 

2 (b)(3)7USC §12 

(CEA) (b)(4) 

3 Q As a result c= ycur trading? 

4 A b)(4) 

s b)(4) 

6 b)(4) 

7 (b)(4) 

8 b)(4) 

9 Q tb)(3) 7 USC §12 (CEA) (b)(4) 

10 tb)(3) 7 USC §12 (CEA) (b)(4) 

11 fbJ(3) 7 USC §12 (CEA) (b)(4) I? 

~------------~ 

12 A Well the OTC rr.ac:-ket, as I stated 

13 yesterday in my testimony, is a =unction of the 

14 :=utures rr.ac:-ket and I, and I stated yesterday, tr.at 

15 you can take positions either/or, Lfb_l(_4_1 ____ ~ 

16 b)(4) 

17 (b)(4) 

18 b)(4) 

19 

20 

21 b)(4) 

22 b)(4) 

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b)(4) 

rb)(4) 

1-

Q You said (b)(4) 

b)(4) who is each ' 

pec:-son? 

b)(4) A 

Q l(b)(4) I" 

b)(4) A 

rb)(4) I -

Q (b)(4) 0 

A b)(4) 

b)(4) 

b)(4) 

b)(4) , rb)(7)(C)1 

fb1(7)(C) l(b)(7)(C) I, ~b)(7)(C) I, I, t:~\(711 anctl(b)(7)(C) I 

b)(4) 

(b)(4) 

b)(4) 

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b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

Q b)(4) 

A b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

Q And were these ccunter-parties banks? 

A l(b)(3) 7 USC §12 (CEA) (b)(4) 

fb)(3) 7 USC §12 (CEA) (b)(4) 

rb)(3) 7 USC §12 (CEA) (b)(4) 

l(b)(3) 7 USC §12 (CEA) (b)(4) 

fb)(3) 7 USC §12 (CEA) (b)(4) 

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1 :b)(3) 7 II C, r ~1 ') 

2 Q rb)(3) 7 USC §12 (CEA) (b)(4) 

3 A l(b)(4) I 

4 Q l(b)(4) Mr. tb)(7)(C) 

5 A (b)(4) 

~-------~ 

6 Q Okay. So let's move tc the next page, 

7 the very beginning at time stamp 16: 04: 4 9, Mr. 

8 l(bl(7J(C) I says nice move l(bl(7J(C) I9 A Yes. 

10 Q -- in response ta the statement you just 

11 read. 

12 A Yeah. 

13 Q What, what de you interpret that to 

14 rr.ean? 

15 A Again, I don't ~ecall having this exact 

16 conversation with !2?)(7Jq. I think r.e's saying good 

1 7 job. That's the way I can, I can tc:-y to interpc:-et 

18 it now a:= saying well done. 

19 Q What does the fbl(7J(C) I refer to? 

20 A I believe it, it refers to cl(b~)(~7~)(C_)~----" 

21 who is a p~c:::essional basketball playe~ whose get 

22 some p~etty good moves and I don't know, to be 

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honest. 

Q What, what is he :,nown fer, Mr. l(b)(7J(C) 

A Fer dcing well in his, in his craft, I 

guess, would be the way I'd describe it. 

Q Any particular mcves that he's known 

:=oc:-? 

A Cross-over d~ibble. I don't know. 

Q Just asking. I don't pay attention to 

sports. 

A I'm sor~y, he's just, he's at the top of 

his game. 

Q o:,ay. 

MR. SMITH: I have a question. Was this 

transaction a part a:= (bl(4l oc:- was it 

pac:-t of your ~ust li:,e taking a view? 

b)(4) THE WITNESS: 

~, Eugene. L(b_l(_4_1 _________________ ~ 

b)(4) 

~---------------------------~ 

~ 

I did tave the time to go back th~cugh 

rr.y trading records that day witr. Mc:-., with Mr. 

Benjamin and Mc:-. Egleson and jtbJ(3)7USC §12(CEA) (b)(4) I, 

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irb)(3) 7 USC §12 (CEA) (b)(4) 

(b)(3)7USC 

§12(CEA) 

b)(4) because I kind of 

wear my heart on my sleeve just :,nowing rr.yself. 

If I do well, I say I did well. If I did poorly, 

I say I just did very poorly. 

I'm very straightforward and as I 

suggested yesterday, guys li:,e f~b_l(_71_(C_I __ JI, l(bl(7J(CJI 

l(bl(7J(C) I and cfb_l(_71_(C_I ___ JI, I rr.ean this is ~ust our 

relationship. 

It's one-uprr.anship tongue-in-er.eek 

bravado and it's really notr.ing rr.oc:-e than tr.at. 

BY MS. RYAL::..,: 

Q So, take, tell me again, I tr.ink we 

talked about this yesterday, but with Mr. l(b)(7)(C) I, 

what was your c:-elationsf'.ip; how long had you known 

him? 

A I knew Mr. l(b)(7)(C) ~ as I c:-err.ember, he 

woc:-ked at Margan Stanley with me when I was there 

:=oc:- rr.y 10-year term. He was in anotr.er area, he 

was on foreign exchange and I was on pc:-ecious 

rr.etals, but we were botr. wc:-estlers in high schocl 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 and we knew eact otter in ttat, we knew of each 

2 other back then and then we just got to be very 

3 close friends on the des~. 

4 I r.ad mentioned yestec:-day I believe that 

5 rr.y wife tried tc set him up on a few dates and 

6 we'd spend a lot of time out of the office, but in 

7 tec:-ms of doing business witr. him, tr.e only times I 

8 recall eve-:: doing business with him was later in 

9 ouc:- relationship when I was executing on bef'.alf of 

10 Mr. l(b)(7)(C) I11 Q Did te trade rretals? 

12 A Ne. 

13 Q Ne? 

14 A He was a markete--::, as :=a--:: as I knew, in 

15 foreign exchange fer l(bl(4l 1- ~------~ 

16 Q And you went to r.igh school with him or 

1 7 he went to a dif:=ec:-ent r.igh school? 

18 A We, r.e went to fbl(7)(C) I Eigh School; 

19 I went to fbl(7J(C) I Higr. scr.ool, but we wrestled 

20 around the same time. 

21 Q o:,ay, let's go tc the page ending 8 622. 

22 A Okay. 

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1 Q On the second to last entry at 19:24:26 

2 

3 

4 A Yeah. 

5 Q What does fbl(4l !refer to? ~--~ 

6 A That refers, okay, I have had a chance 

7 to review tr.is document prier tc this. 

8 Q o:,ay. 

A b)(4) 9 

b)(4) (b)(7)(C) 10 

b)(4) 11 

12 Q b)(4) 0 

13 A 

fb)(4) 14 I15 MR. BENJAMIN: (b)(4) 

16 fb1(4) I" 

17 THE WITNESS: b)(4) 

b)(4) 18 ~-----------~~ 

19 

2 O l~(b-1(_'1 __ ~ 

21 b)(4) 

~--------------------~ 

22 l(b)(4) I Mc. fb1(7)(C) I (b)(4) ~-------~ 

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1 b)(4) 

2 Kow, (b)(7)( 

Cl b)(4) 

3 b)(4) 

4 I'm just -

5 BY MS. RYALL: 

6 Q KbJ(7)(~ ~ is Mr. l(b)(7)(C) I? 

7 A Mr. !:b)(7)(C) 1. 

8 Q Okay. 

9 A l(b)(4) I \~J,(7) 1 S Lb_)(_4) _______ ~ 

10 fb)(4) lfb1(7)( l(b)(4) 

11 (b)(4) 

12 (b)(7)(C (b)(4) 

' 

13 

14 

15 Ll(b-1(_'1 _____ ~ 

16 irb)(3)7USC §12(CEA) (b)(4) 

1 7 tb)(3) 7 USC §12 (CEA) (b)(4) 

18 IL(b_)(3_1_7_u_s_c_§_l_2(_C_EA_l_(_bl_(4_1 ------~I Lrb_l(_'I _____ ~ 

19 

20 b)(7)(C (b)(4) 

21 (b)(4) 

22 b)(4) 

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Q Okay, so -A 

-- it's exagge~ation. 

Q Moving to the next page. 

A Yes. 

Q 8623, there's one line on there. 

A ur.-hur .. 

Q At 19:26:55 and b)(4l 

(b)(4) 

l(b)(4) IAl(b)(4) I 

Q b)(4) 

[b)(4) 1, 

A b)(4) 

b)(4) 

(b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

Q b)(4) 

~--------------------~ 

(b)(4) 

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1 A (b)(4) 

2 b)(4) 

3 

4 

s 

6 rb)(4) 

7 Q b)(4) 

8 rb)(4)1? 

9 A (b)(4) 

10 b)(4) 

11 b)(4) 

12 Q Okay, than~ you. 

13 MS. RYAL::..,: And we' 11 mar:< tr.is as 

14 Nurr.ber S, please. 

15 ( Jordan Exhibit Ne. S was marked 

16 =a~ identification) 

17 BY MS. RYAL::..,: 

18 Q And I' rr. handing ycu wr.at we' 11 mar:< as 

19 Exhibit 5. Could you please read through that. 

20 A Sure thing. 

21 Q Okay. 

22 A ur.-hur .. 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 Q Did ycu c:-ead through it? 

2 A Yes. 

3 Q Okay. And what do you recognize tr.is 

4 document tc be? 

5 A I don't remembec:- having this 

6 conversation, but I can interp~et it to be a 

7 conversation I r.ad with rr.y boss, rb)(7)(C) I, on 

8 August 22nd, 2008, sta~ting at 8:40 a.m. 

9 Q Via instant Bloombe~g? 

10 A Again, via instant Bloomberg. 

11 Q Okay. And=~ the record, this is an 

12 exf'.ibit that is five pages, starting on the first 

13 page with tr.e bates number JPM-AG 00209214 going 

14 th~cugh 2009218. 

15 And if, M~. Jordan, if I could di~ect 

16 your attention to tte fi=th line down at time 

1 7 stamp 12: 42: 27, could ycu c:-ead that :=oc:- us and 

18 translate. 

19 A Sure. I could do rr.y best. I don't 

20 remerr.ber. I spoke tc KbJ(7l(loften, so I don't 

21 remerr.ber this exact day, but -

22 Q I understand that you rr.ay not remerr.ber 

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these specific conversations, but since it's your 

language -

A Sure, I'll do -Q 

-- that you could perhaps intec:-pret it 

:::oc:- us. 

(b)(3) 7 A I' 11 do my best tc interpret it. II S (; 

l(b)(3) 7 USC §12 (CEA) (b)(4) 

fbJ(3) 7 USC §12 (CEA) (b)(4) 

fbJ(3) 7 USC §12 (CEA) (b)(4) 

b)(3)7USC 

1?W.FA1 

Q b)(4) 

b)(4) 

A b)(4) 

~---------------~ 

(b)(4) 

b)(4) 

l(b)(3) 7 USC §12 (CEA) (b)(4) 

b)(3) 7 USC §12 (CEA) (b)(4) 

(b)(3) 7 USC §12 (CEA) (b)(4) 

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1 b)(3)7USC §12(CEA) 

b)(4) 

2 Lrb_l(_31_7_u_s_c_§_12_(_c_EA_l_(_bl_('_l _~I _ 

3 MR • BENJAMIN· • (b)(3)7USC §12 /(;FA1 /h1/41 

4 THE WITNESS: l(b)(3)7USC §12(CEA) (b)(4) 

6 Kow, having theta means that, we 

7 described yesterday brie~ly, is time decay, so 

8 eacr. day that, and I'm not a gc:-eat explainer of 

9 options, but as I unde~stand it, every day as it 

10 gets close~ and closer to expi~ee, you're going to 

11 lose a certain arrount of value en ttat option. 

12 (b)(4) 

13 b)(4) 

14 

15 

16 

17 b)(4) 

18 b)(4) 

19 ,-., 

' 

(b)(4) 0 

~------------------~ 

20 A b)(4) 

21 b)(4) 

22 b)(4) 

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~b_)(4_1 ________________ ~1P{(7)( I, 

b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

b)(4) 

b)(4) 

fb1(4) 

Q l(b)(3) 7 USC §12 (CEA) (b)(4) 

rb)(3) 7 USC §12 (CEA) (b)(4) 

b)(3)7USC §12 f'.FA1 1h11.11 

A fbJ(3)7USC §12(CEA) (b)(4) 

fbJ(3)7USC §12(CEA) 

Q Okay. 

A so witr. that -Q 

b)(4) 

(b)(4) 

l

b)(4) I ~--~-

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Q Sc where is ttat in ttere? 

A It's not in thec:-e, but tr.at' s the way 

that, tr.at' s the way I'm tc:-ying to interpret this. 

Q o:,ay. 

A b)(4) 

b)(4) 

(b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) Q 

b)(4) 0 

b)(4) A 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

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b)(4) 

(b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

(b)(4) 

fb1(4) L 

Q (b)(4) 

(b)(4) 0 

b)(4) A 

(b)(4) 

b)(4) 

MR. BATTAGLIA: b)(4) 

(b)(4) 

~------------~ , I was asking if you 

rreant ptysical metal? 

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b)(4) THE \riiITNESS: 

b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

b)(4) 

fb)(4) I 

MR. PENICK: b)(4) 

(b)(4) 

b)(4) 0 

THE WITNESS: (b)(4) 

b)(4) 

b)(4) 

~-. 

(b)(4) 

b)(4) 

(b)(4) 

b)(4) 

fb1(4) I 

b)(4) MR. BENJAMIN: 

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b)(4) 

b)(4) 

THE \riiITNESS: t:b)(4) 1. 

MR. BENJAMIN: -- b)(4) 

b)(4) 

b)(4) 

lb)(4) I~ 

THE \riiITNESS: rb)(41. 

MR. (b)(4) BENJAMIN: 

l(b)(4) 

THE WITNESS: (b)(4) ~----------J 

~. 

BY MS. RYAL::..,: 

Q fb)(3) 7 USC §12 (CEA) (b)(4) 

b)(3) 7 USC §12 (CEA) (b)(4) 

~fb_l(3_1_,_u_s_c_§_1_2 (_c_EA_l_(_bl_('_I _________ JI? 

A tb)(3) 7 USC §12 (CEA) (b)(4) 

b)(3)7USC §12 rC:/\\ fh\fA\ 

Q o:,ay. What -

A (b)(4) 

b)(4) 

b)(4) 

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b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(7)(C) (b)(4) (b)(4) 

b)(4) 

fb1(4) 1-

Q And then could ycu ta:,e us tr.rough hew 

you would gc abcut l(b)(4) F 

b)(4) A 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

fb1(4) IQ b)(4) 

l 

A l(b)(4) 

~ 

I· 

Q Okay. 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 

2 

3 

4 (b)(4) 

5 b)(4) 

6 b)(4) 

7 b)(4) 

8 b)(4) 

9 

10 

11 Q b)(4) 

12 b)(4) 0 

~-----------~ 

13 A b)(4) 

14 

15 

16 

17 

18 ,-., (b)(4) 

'~------------------~ 

19 b)(4) 

2 0 fb1(4) I" 

21 A b)(4) 

22 b)(4) 

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b)(4) 

rsm 

w· 

b)(4) 

b)(4) 

b)(4) 

fb1(4) I 

b)(4) 

rb)(4) I 

MR. SMITH: Could ycu descc:-ibe exactly 

what you' re looking at en a scc:-een when you' re 

talking about garr.ma and theta? 

THE WITNESS: (b)(4) 

(b)(4) 

(b)(4) 

rb)(4) IBY MS. RYAL::..,: 

Q b)(4) 0 

A 

l(b)(4) 

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,-., (b)(4) 

' 

b)(4) 

A b)(4) 

b)(4) 

fb1(4) I 

Q o:,ay. 

A b)(4) 

b)(4) 

l(b)(4) 

(b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

b)(4) 

(b)(4) 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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(b)(4) 1 

b)(4) 2 

3 

4 

b)(4) 5 

(b)(4) 6 

7 fb1(4) 

b)(4) 8 Q 

(b)(4) 9 

10 fb1(4) I" 

11 A rb)(4) r 

12 Q l(b)(4) I· 

A (b)(4) 13 

14 Q All ~ight. 

15 A Yeah. 

16 Q All ~ight. 

17 MR. GRIMM: In ycur testirr.ony yestec:-day 

18 you said ttat one c~ your personal st~ategies in 

19 general was to b)(4l 

~----------------~ 

2 0 THE \riiITNESS: ~. 

21 MR. GRIMM: (b)(4) 

22 b)(4) 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 tb)(4) lo 

2 THE WITNESS: l(bl(4 1. 

3 MR. GRIMM: Could ycu desc~ibe, if 

4 that's the case, (b)(4) 

~-------------~ 

b)(4) 5 

6 THE WITNESS: (b)(4) 

~------------~ 

b)(4) 7 

8 b)(4) 

b)(4) 9 

(b)(4) 10 

11 b)(4) 

12 MR. GRIMM: (b)(4) 

13 ~fb1_(4_) ----~I. 

14 Could you try to add scrre speci~icity to 

15 what it is you think? (bl(4l 

16 rb)(4

l I, could you be more specific? ~-------~ 

17 THE WITNESS: (b)(4) 

~------------~ 

(b)(4) 18 

b)(4) 19 

b)(4) 20 

21 (b)(4) 

b)(4) 22 

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b)(4) 

b)(4) 

(b)(4) 

b)(4) 

fb1(4) 

b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

b)(4) 

I 

Lfb_)(4_) ____ J 

MR. PENICK: Do you recall whetr.er you 

had any puts at this time? 

THE WITNESS: b)(4) 

b)(4) 

b)(4) 

MR. PENICK: Do you, if you just have 

calls, is it possible fer you ta actually get 

short with the calls o~ can you only get less 

long? 

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THE \riiITNESS: Ko, you get shcrt. 

MR. PENICK: How do you get short with 

the position of only long calls? 

THE WITNESS: Because your long options, 

in general, puts and calls are the same, the way I 

understand it, and even if you~ long calls and the 

rr.ac:-ket moves lower, effectively you get shortec:-. 

MR. PENICK: But do you actually get 

short tte market o~ do you just get less long in 

the rr.ac:-ket? 

THE WITNESS: I don't, I can't 

differentiate ttat difference. All I knew is if 

you reload you~ position, it will stow you sho~ter 

as the market gees lower, from my undec:-standing. 

MR. BATTAGLIA: b)(4) 

cl(b_l(_4_1 ______ ~1, were tr.e trades you were leaking 

back at in the futures market or were tr.ey in tr.e 

spot mar:,et? 

THE WITNESS: (b)(4) 

~----------~ 

b)(4) 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 BY MS. RYALL: 

2 Q rb)(3) 7 USC §12 (CEA) (b)(4) 

3 fbJ(3) 7 USC §12 (CEA) (b)(4) 

4 ~fb_l(_J1_,_u_s_c_§_12_(_c_eA_l_(_bl_('_I -----~I? 

5 A rb)(3) 7 USC §12 (CEA) (b)(4) 

rb)(3) 7 USC §12 (CEA) (b)(4) 1. 6 

~---------------~ 

7 Q So wtat would the significance of that 

8 be in wr.at you've been talking about? 

9 A b)(4) 

10 

11 

fb)(4) 12 

13 (b)(4) 

14 b)(4) 

fb)(4) 15 

16 Q o:,ay. Moving down a couple lines to the 

17 time starr.p 12:44:35, you say f~l,P~_\. 1 ? been a huge 

18 seller c= dollar cad? 

19 A Cad. 

2 0 Q Tr.is morning, they say V srr.ac:-t name FYI? 

21 A ur.-hur .. 

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1 A I, I don't remember ttis. I cculd 

2 assurr.e that, you knew, you r.eac:- people say 

3 b)(3)7USC §12 been (;FA1 /h1/41 a big sellec:-. You knew, we used 

4 to, I dcn't :,now at this time, but Lrb_l_(4_1 ____ ~ 

5 b)(4) 

6 [b)(3) 7 USC §12 (CEA) (b)(4) 

7 b)(4) 

8 fb)(4) fb)(7)(C) 

9 

10 

11 

12 Q So dces the srr.ac:-t name mean b)(3)7USC er 

13 does it rr.ean the counter-party to }~lPF~.,., ? 

14 A I don't remembec:- in this context. 

15 Q O~ay. Okay. Let's move ta the third 

16 page which ends 9216 at time starr.p 16:10:37, and 

1 7 rb)(3) 7 USC §12 (CEA) (b)(4) 

18 tb)(3)7USC §12(CEA) (b)(4) I19 A Uh-huh. 

20 Q wr.at, what does tr.at mean? 

21 A I interp~et ttis to mean -- I can try to 

22 interpret it. 

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1 !~{(7)(~ if you look twc lines earlier, !g{(7l( I 

2 fb)(3) 7 USC §12 (CEA) (b)(4) 

3 b)(3)7USC§12 

CEA) (bl/41 

(b)(4) 

4 b)(4) 

5 

6 l(b)(3) 7 USC §12 (CEA) (b)(4) 

7 

8 b)(4) 

9 l(b)(3) 7 USC §12 (CEA) (b)(4) 

10 b)(4) 

11 b)(4) 

12 fb1(4) 

13 fb)(3)7USC §12(CEA) (b)(4) 

14 b)(4) (b)(4) 3 l(b)(4) (b)(3) 7 USC § 201 S(c) 

~---t'.'.(blc:(7cc)(CC'.J . 

15 Q O~ay, I'm finished with that one. 

16 MS. RYAL::..,: We can ta:,e a few minutes 

1 7 brea:.:;:. 

18 (Recess} 

19 BY MS. RYALL: 

20 Q Back en tr.e c:-ecoc:-d now. I just wanted 

21 to ask you a question. \riie were talking about tr.e 

22 options in that last extibit. Wtat accounts or 

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po~t=olio wculd those options have been in? 

A b)(4) 

~--------------------~ 

b)(4) 

Lrb_l(_,1 ___ ~ 

Q b)(4) 

A b)(4) 

b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

MR. BATTAGLIA: I had a ::allow-up 

question on EFPs that we were talking about 

yesterday, so unrelated to the IMs. 

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You we--::e taL(ing abcut Lfb_l(_71_(C_I __ ~ and 

b)(4) 

[°)(7)(C) r)(4) tb)(4) 

rb)(4) ;b)(7)(C rb)(4) 

1 I 

b)(4) 

THE WITNESS: l(b)(4l ~-----~ 

MR. BATTAGLIA: b)(4) ~-------~ 

E:4(b)(4) rb)(4) 

b)(4) 

THE WITNESS: (b)(4) 

MR. BATTAGLIA: Okay. In that scenario, 

how would tr.e futuc:-es sr.ow up in your account, 

wouldn't they have to be executed on COMEX er -

THE WITNESS: I think I described this 

yesterday b)(4l 

~-------------------~ 

MR. BATTAGLIA: Okay. 

THE WITNESS: (b)(4) 

~---------~ 

b)(4) 

b)(4) 

(b)(4) [b)(7)(C) 

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l(b)(4) 

b)(4) 

MR. BATTAGLIA: b)(4) 

THE WITNESS: (b)(4) 

l(b)(4) fb)(7)(C) fb)(4) 

(b)(4) 

b)(4) 

l(b)(4) fbl(l)(C)lf_bl_('_I -----~ 

b)(4) 

(b)(4) 

MR. BATTAGLIA: Okay. Sc how would you 

trade, what would it be, would it be the twc 

segments separately? 

THE WITNESS: (b)(7)(C) (b)(4) 

b)(4) 

fb1(4) 

MR. BATTAGLIA: b)(4) 

~---------~ 

b)(4) 

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b)(4) 

~-------~ ' 

THE WITNESS: (b)(4) 

b)(4) 

MR. BATTAGLIA: b)(4) 

~--------~ 

(b)(4) 

THE WITNESS: (b)(4) 

~------------~ 

MR. BATTAGLIA: 

(b)(4) 

THE WITNESS: (b)(4) 

fb)(4) 

~---~~---- 4 - MR. BATTAGLIA: Lfb_)(-)--------~ 

b)(4) 

fb1(4) 

THE \riiITNESS: ~ 

MR. BATTAGLIA: b)(4) 

b)(4) 

THE WITNESS: (b)(4) 

Lfb_l(_'I ____ ~ 

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MR. BATTAGLIA: (b)(4) ~---------J 

b)(4) 

THE WITNESS: (b)(4) 

b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

b)(4) 

b)(4) 

MR. BATTAGLIA: b)(4) 

~-------~ 

b)(4) 

(b)(4) 

b)(4) 

THE WITNESS: (b)(4) 

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so 

b)(4) 

MR. 1 BATTAGLIA: crb_l(_'________ JI· Ttank 

you. 

MS. RYALL: Can we rr.ac:-k this as Exhibit 

6, please. 

(Jordan Exhibit No. 6 was rr.ac:-ked 

for identification} 

BY MS. RYAL::..,: 

Q And could you please take some tirre to 

read over ttat exhibit. 

A Sure. 

Q For the record, this is a three-page 

exhibit and in the bottcrr. c:-ight-hand cornec:- of the 

=i~st page it says JPM-AG 00217633. The last page 

is 7635. 

Did you have a chance to c:-eview that? 

A Yes, I did. 

Q o:,ay. And do you recognize wr.at this 

is? 

A I, tr.is looks to be an E-rr.ail with my 

:=riend, fLb_l(_71_(C_I ___ JI, at, on January 22nd, 2009, 

starting at 8:36 a.m. 

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1 Q An E-mail or an instant ctat? 

2 A Scrry, again, it's an IM, a Bloomberg 

3 IM. 

4 Q Okay, than:< ycu. And i:= I could direct 

5 your attention to that :=ic:-st page at tirr.e stamp 

6 13:49:54. 

7 Could you ~ead that ::a~ us and then 

8 explain what, wr.at you' re talking about? 

9 A irb)(3) 7 USC §12 (CEA) (b)(4) 

10 bucks and on a run. That's why, that's why. ::..,ave 

11 how it teld 843 and a half. 

12 I don't, again, I'm sorry to sound like 

13 a c:-epeating record, I don't remerr.ber this 

14 conversation with fb_l(_7_1(C_l ___ ~I· 0

15 It, I could tc:-y to do my best to 

16 interpc:-et (b)(4) ~--------------------" 

17 b)(4) 

18 Q b)(4) 

19 b)(4) 

2 0 A (b)(4) 

~-------------------~ 

21 fb1(4) 

22 Q Sc what about, what does size rrean for 

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you when you say it? 

A Again, it's, it's ~ust bravado. I don't 

(b)(4) ,(now. 

b)(4) 

Just kind c:= pu:=fing out my chest and, 

it's very emba--::rassing to --::e-read ttese, but I 

just toe:,, b)(4) 

~---------------~ 

Q o:,ay. 

A Ll(b_)(4_1 _____ ~ 

Q wr.at does that mean? 

A (b)(4) 

~---------------------~ 

b)(4) 

~--------------------------~ 

(b)(4) 

b)(4) 

Q o:,ay. 

A l(b)(4) 

BENJAMIN: Tf'.ose we--::e ~ust 

hypothetical exarr.ples? 

THE \riiITNESS: I'm pic:.:;:ing numbec:-s. I 'rr. 

picking numbers. 

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b)(4) 

b)(4) 

(b)(4) 

~---------------------~ 

b)(4) 

~fb_)(4_1 ____ J 

BY MS. RYAL::..,: 

Q And ttree lines dawn at 13:56:16, 

cfb_l(_71_(c_1 _____ I says thanks fer tr.e leak man. 0

A Yeah. I don't -Q 

\riihat is he referring to? 

A I don't know, to be honest with you. 

You knew, as I brie:=ly described about l(bl(7J(CJI 

yesterday, r.e was a ve--::y, a young kid wr.o I really 

had a friendship with, but I don't even :,now what, 

what he rr.eans by this. 

Q O~ay. Turning to the next page ending 

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1 7634, could you read througt these and take us 

2 thc:-cugh what you mean? 

3 A Whicr. one? 

4 Q Sc beginning at tte tap at 14:01:15. 

5 A Sure. rb)(3)7USC §12(CEA) (b)(4) 

6 l(b)(3) 7 USC §12 (CEA) (b)(4) I 

7 l(b)(3) 7 USC §12 (CEA) (b)(4) 

S rb)(3) 7 USC §12 (CEA) (b)(4) 

9 rb)(3) 7 USC §12 (CEA) (b)(4) 

lO rb)(3)7USC §12(CEA) (b)(4) 

ll rb)(3)7USC §12(CEA) (b)(4) 

12 l(b)(3)7USC §12(CEA) (b)(4) 

lJ rb)(3)7USC §12(CEA) (b)(4) 

14 Do you want me to go tc the next line? 

15 Q Yes. 

16 A Nice cne man, I ctoked on sauce -

1 7 choc:.:;:ed, but I think he rr.eans cr.oked, if I read 

18 this and I guess I'd need a little background, 

19 t:bJ(7)(CI, 1 cfb_l(_71_(C_I ___ J was like a, sorry, choc:.:;:ed on 

20 sauce, choked. 

21 I think he's saying that he did poorly 

22 is the way I'd interpret that. 

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He was a very, from what I recall, very 

tectnical-oriented guy, liked looking at charts 

and I believe his background was wor:,ing at a 

hedge fund, Ll(b_l_(7_1(_C_I ___ JI, where he wc:-cte like 

computer p~cgrams. And te just stayed up all 

nigr.t, from what he told me, loc:.:;:ing at charts; 

and sauce ~e~e~s to one of tis theories about hew 

rr.ac:-kets woc:-k and I could wal:< ycu tr.rough tr.e way 

he described sauce to me the way I understand it. 

Q Nutshell version. 

A What's tr.at? 

Q Nutshell version. 

A Nutshell version. Oh, soc:-ry about that. 

If the rr.ac:-ket r.ad an inside day fc:-crr. tr.e previous 

day's candle, li~e i~ you look at ctarts, ttey tad 

candles, if it tad an inside day, tten the next 

day if it would come in in the middle of that 

inside day and it get above the day befcre' s high 

or low, he thought that that was a good 

oppcrtunity to buy it if it went up or sell it 

when it went down. 

So I ~ead this to believe that he traded 

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on that pattern and he choked, it didn't wor~, 

that's how I ~ead it. 

Q What does the sauce refer to? 

A Ee called this his tteo~y, he called it 

special sauce, r.e gees nobody knows about tr.is, 

this is a good way to trade if it gets eve~ this 

and it just wasn't -

Q Okay. 

A __ b)(4) 

b)(4) 

(b)(4) 

b)(4) 

b)(4) -Q 

\riiait, but ycu' c:-e taL(ing now about you 

say at 14:22:05? 

A l(b)(3) 7 USC §12 (CEA) (b)(4) 

b)(3)7USC §12(CEA) 

b)(4) 

Q (b)(4) 

b)(4) is tr.at r.ow you 

take that? 

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A I thin~ if you read ttrough, I, it may 

be a typo. That, that wculd be a rathec:- extreme 

rr.ove, sc I don't knew wr.ere the rr.ac:-ket was. 

Q That would be an extreme rr.ove for gold? 

A Tc go up almost 20 dolla~s in -Q 

2 0 minutes? 

A Yeah, I've never, I dcn't thin:< I've 

ever seen a scena~io li~e that, so I'm assurring 

it's a mistype. I dcn't ,(now. 

But I'm ~ust basically saying, I 

interpc:-et it to rr.ean your sauce thing dcesn 't 

rratter, I pour it on my desk, I spill stuff all 

over it, like, I don't know. But I think I'm 

rraking light of his theories. 

Q O~ay. So then skip dawn to 14:27:37. 

You're typing an entry r.ere. 

A Sorc:-y, pal, you cover it guic:.:;: aftec:- rr.y 

heads up; and I interpc:-et tr.at to mean like I told 

you I was bullish, you should have listened to me. 

That's the way I read tr.at. 

Q Did you eve~ tell, would you ever tell 

him I'm about ta buy -

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A I don't -

Q -- size in gold be~o~e you actually 

bought it? 

A To be honest, I didn't even think l(b)(7)(C) 

was trading gold oc:- silver. From what I remerr.ber 

of cur relationship, it was rr.e trying tc lac:< li:,e 

a bigshct ta a young kid, sc I don't knew. It's 

pretty, I, I mean ttat's ~ust net wtat I do, so I 

don't ttink I would ever do that. 

Q Well you cover it quick kind of sounds 

like he should r.ave covered his gold, tc me? 

A Well it does sound li~e that if you read 

it literally, but I :,now that tr.e place he was 

wo~king, he was, I think I described, I don't know 

if I described this yesterday, but I knew fer at 

least a year if you're at ttis place you have ta 

paper trade and show all your wins er lesses to 

your bosses befcre they'll actually give you money 

to trade. It was like a small stop. 

So, I mean I wasn't even cleac:- what he 

was trading. I didn't c:-eally spend too much time 

=ocused on it. 

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Q If you continue dcwn r.e says yeah, 

fb)(3) 7 USC §12 (CEA) (b)(4) 

(b)(3)7USC §12 W.FA1 1h11.11 

A rb)(3) 7 USC §12 (CEA) (b)(4) 

Q fbJ(3) 7 USC §12 (CEA) (b)(4) 

l(b)(3) 7 

And then at 14:29:50 he says ttose are 

rr.y bad days when it goes so close and dcesn 't gc. 

A Yeah. 

Q And then at 14: 30: 51 you have an entry, 

can you read that and tell us wtat it means? 

A No, you're ~ight, it's net. 14:34 -

Q 14:30:51. 

A b)(4) 

(b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

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b)(4) 

Q Turning to tte next page ending 7635, at 

the time entry 14: 52: 59 you say show time and tr.en 

two lines dawn pay day is and it's just starting. 

A Uh-huh. 

Q And tr.en you r.ave a bunch of letters 

hec:-e. 

A Yeah. 

Q Could you tell us what that means? 

A Yeah, this is anothec:- embarrassing 

moment. 

Q DGC CJ? 

A That rr.eans don't get cocky, Chris 

Joc:-dan. And I c:-ead this to mean I was having a 

good day. sr.ow time, like leak at tr.at, I called 

it so ~ight, that's how I ~ead that. 

And he said, geesh, like good call. And 

I'm saying pay day, like I did well today, that's 

how I inte~pret that, and it's just starting, li~e 

this is the start of a big move higter. 

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And then I'm tc:-ying to talk rr.yself down 

and I use DCG a lot, don't get cocky, because from 

rr.y experience wr.enever I got coc:.zy, I wculd lose a 

lot of money very sr.ortly aftec:-. 

But again, it's bc:-avadc with a :,id I'm 

trying to impress. 

Q o:,ay. Can we :,eep going from there. 

A Yeah. Man oh man. 

Q Tr.at' s l(bJ(7J(CJ I? ~----~ 

A (b)(4) 

Q Wtich is you? 

A Scrry about tr.at. b)(4l 

~------~ 

(b)(4) 

~-----------------~ 

b)(4) and I believe earlier in this 

we were talk, (b)(4) 

~------------------~ 

b)(4) 

(b)(4) 

fb)(4) 

Q o:,ay. 

A (b)(4) 

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1 b)(4) 

2 

3 b)(4) 

4 b)(4) 

5 (b)(4) 

6 

7 

8 

9 b)(4) 

10 b)(4) 

11 Q Tr.at' s what ~----~ 

l(bl(7J(C) I says? 

12 A b)(4) 

13 

14 

15 

16 Q o:,ay. 

1 7 MS. RYA::..,1: And if we cculd rr.ac:-k this as 

18 Exhibit 7. 

19 (Jordan Exhibit No. 7 was rr.ac:-ked 

20 for identification} 

21 BY MS. RYAL::..,: 

22 Q We've handed you Exhibit 7. Please take 

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1 time to read througt that. 

2 A o:,ay. 

3 Q And for the record, this is a four-page 

4 exhibit and on the bottcrr. c:-ight-hand cornec:- it 

5 says JPM-AG 00217759. Tte last page is 217762 and 

6 I'll represent that the last page is blank but 

7 that's r.ow it was produced to us. 

8 So starting on the ~i~st page c~ ttis 

9 exhibit, Mc:-. Jordan, at time starr.p 14:48:34, let's 

1 O read througr. and you can take us througr. what's 

11 going on here. 

12 A o:,ay. I don't remember tr.is 

13 conversation, but again, as I stated yestec:-day, 

14 this is rr.y, rr.y very close friend, cl(b_l(_7_)(C_l ___ ~I, (b)(7)(C) 

15 b)(7)(C) 

16 (b)(7)(C) 

17 l(b)(7)(C) It's an IM, again. 

18 Q Does he trade metals? 

19 A Nape. 

20 Q Okay. 

21 MR. BENJAMIN: wr.en you say err.ec:-ging 

22 mar:,et, you mean emerging market equities? 

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THE \riiITNESS: I believe r.e' s in err.ec:-ging 

mar:,et equities. I 'rr. net exactly sure what he 

does but, you know, we just talk, give cur views 

in the markets, but just more on a friendly basis. 

He's saying push it here. 

BY MS. RYAL::..,: 

Q Wait. The first one at 14:48:34 is you. 

A I said mmrr., r.old on to your yarmulke's. 

That's a reference that (b)(7)(C) used tc, it's very 

embarrassing to read, l(b)(6l (bl(7J(C) land they 

just have a joking relationship about tr.at and 

it's very embac:-rassing to c:-ead. 

Q But what are you trying, what message 

are you conveying? 

A Eold on to your tats, like I thin~ 

something is about to happen, li:,e I feel, when I 

-- we used to always say hold on to your hats, I 

thin:< tr.e market's about to rr.ove. I don't know 

what I'm, wr.at market I'rr. talking about hec:-e. 

He's saying push it here, question rr.ac:-k. 

Q What does that mean? 

A I don't know what he rr.eans. I said I 

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rb)(3) 7 USC §12 (CEA) (b)(4) 

b)(3) 7 USC §12 (CEA) (b)(4) 

tb)(3) 7 USC §12 (CEA) (b)(4) 

(b)(4) 

b)(4) 

b)(4) 

b)(4) 

kb)(4) I cl ____ ~· But i= I say I have a lot of gamma, 

that means i= it keeps going up, I'll get longer 

because witr. positive garr.ma, as I descc:-ibed 

eac:-liec:-, you get longec:- as it gees up, shoc:-ter as 

it goes down. 

Q b)(4) 

b)(4) 

[b)(4) 

A l~b)(41 

Q (b)(4) ' 

(b)(4) A 

(b)(4) 

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(b)(4) 

b)(4) 

(b)(4) 

(b)(4) Mr. fb1(7)(C) wb)(4) 

b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

Q Wait, wait. Go back to tr.e one be:=oc:-e 

that. 

b)(4) 

A rb)(4) 1. 

Q wr.at would be big :=oc:- you? 

A (b)(4) 

(b)(4) 

b)(4) 

b)(4) 

Q So just assume tr.at you were going into 

a dip, big, b)(4l 

~-----------------~ 

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l ~, hew wculd you do that, would you put them 

2 all in at tte sarre time? 

3 A b)(4) 

~-------------~ 

4 Q Okay. 

5 A (b)(4) 

~---------------------~ 

6 (b)(4) 

7 

8 b)(4) 

9 b)(4) 

10 Q o:,ay. 

11 A b)(4) 

12 b)(4) , ~--------------------~ 

I believe, 

13 I c:-ead that to mean. 

14 And then he says also they will make a 

15 stand on this S&P 500 at some pcint. 

16 b)(4) 

17 b)(4) 

18 b)(4) 

19 (b)(4) 

20 b)(4) 

21 Q So ycu'c:-e saying that you interpret this 

22 to mean b)(4l 

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rb)(4)1? 

A rb)(4) I 

Q b)(4) 

A rb)(4) I 

Q b)(4) 

(b)(4) 

I 

Q o:,ay. 

A And -

Q (b)(4) 

~tb)-(41 ___ 1, 

A b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

~------------------

b)(4) 

b)(4) 

Lfb_)(4_1 -~IThere still is gamma and tteta 

asscciated to it, but I don't c:-err.ember saying 

this. I thin~ it's exaggeration and it's the way 

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we talked ta each othe~. That's all it is. 

Q Eave you heard of a digital option? 

A I've heard tr.e term, I den' t :,now what 

it means. 

Q o:,ay. 

MR. GRIMM: Are these options ~elated tc 

4 the statement a couple lines up (bl( l 

~------~ 

b)(4) 

THE WITNESS: It seerrs like that's what 

I'm, I'm tal~ing about. I'm yeah, I mean it's, 

I would assurre so, that's just the way we talked 

to each other, but, I mean, I don't believe any of 

this to be true. 

BY MS. RYAL::..,: 

Q o:,ay. And then he says den' t want to be 

on the ether side of that puppy and then you say, 

b)(4) 

41 A Yeah. Again, I, we had, cl(b_l(_7_1(C_l~l~(b_l(____ " 

b)(4) 

Q wr.o \bl(7J(C , Ljtb_l_('_l(_c_1 ---~I? 

A rb)(7)(C) , b)(4) 1 

~-----------------~ 

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1 (b)(4) 

~-------------------~ 

2 ~E=]L(b_)(4_1 _________________ ~ 

3 

4 

5 

b)(4) 6 

b)(4) 7 

(b)(4) 8 

9 

10 

b)(4) 11 

b)(4) 12 

Q b)(4) 13 

b)(4) 14 

15 A b)(4) 

~-------------~ 

16 (b)(4) 

~-----------------------~ 

17 

b)(4) 18 

19 

20 

21 ~-

22 b)(4) 

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b)(4) 

b)(4) 

b)(4) 

b)(4) 

Kb)(4) I 

(b)(4) 

(b)(4) 

b)(4) 

Q b)(4) 

b)(4) ' 

b)(4) A 

b)(4) 

(b)(4) 

b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

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1 (b)(4) 

2 b)(4) 

3 b)(4) 

4 Q b)(4) 

5 A b)(4) 

6 b)(4) 

7 MR. SMITH: Did you no~mally o~ would 

8 you coordinate trades with ether t~ade~s 

9 desk, li:,el(b)(7)(C) I, would ycu -

10 THE \riiITNESS: fbl(7)(C) fbl(4) 

1l fb1(4) l(b)(7)(C) l(b)(4) 

12 

13 

14 b)(4) 

15 (b)(4) 

r l 0 MR. PENICK: kb)(4) L 

~-------~ 

17 b)(4) 

18 THE WITNESS: (b)(4) 

19 

20 

21 

22 

on the 

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(b)(4) 

b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

BY MS. RYAL::..,: 

Q b)(4) 

(b)(4) 

b)(4) 0 

A b)(4) 

b)(4) 

(b)(4) 

b)(4) 

b)(4) Q 

b)(4) 0 

A b)(4) 

(b)(4) 

(b)(4) 

l(b)(4) 

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1 Q Mcving to the next page. So Mr.l~(b-1(_71_(c_i __ ~ 

2 at the top stac:-ts saying exactly like f:bl(7J(C) I said, 

3 who is l(bl(7J(C) j? 

4 A I believe that is a reference, and I 

5 don't know, to ~l(b_l(7

_l(_c_1 ___ JI. l(bl(7J(C) 

6 b)(7)(C) 

7 and he likes to talk about timself and toops a 

8 lot, so I ttink that's what he's tal~ing about. 

9 So maybe l(b)(7)(C) I said sometimes ycu have to ma:,e 

10 them ~ump. I don't know what he's c:-e:=ec:-ring to 

11 hec:-e. 

12 Q So ~fb~)(7~)(~C~) ___ J was a bas~etball player? 

13 A Ee was a basketball player back in tte 

14 '80s and '90s. 

15 Q Professional? 

16 A Yeah. 

17 MR. BENJAMIN: And college. 

18 THE WITNESS: And college. 

19 BY MS. RYALL: 

2 0 Q (b)(4) 

~-----------------~ 

21 (b)(4) 

22 b)(4) 

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1 A I don't know what he means by that. I 

2 really don't. 

3 Q Okay, rr.oving furtr.er down on that page. 

4 A Yeah. 

5 Q 15:31:26, you tell him, ~lm 7 USC§12 (CEA) 

6 l(b)(3) 7 USC §12 (CEA) (b)(4) 

7 A Okay. 

8 Q And he says barr.? 

9 A Yeah. 

10 QI noticed that that ccrres out a let in 

11 your IMs, barn? 

12 A Ttat's, again, a reference to I'm doing 

13 well. 

14 Q Okay. 

15 A And an ugr. is I'm doing pearly, 

16 generally. 

1 7 Q Ugh? 

18 A I'd say ugh. I mean gene~ally you could 

19 tell by E-mails if I ttougtt I was doing well er 

20 if I thought I was doing poorly. And, barr., I did 

21 well, or ugr., I stin:c 

22 Q b)(4) 

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1 

2 

3 A God, this is embarrassing. I thin:< ycu 

4 have to go back to the earlier E-mail. 

S l(b)(3) 7 USC §12 (CEA) (b)(4) 

G rb)(3) 7 USC §12 (CEA) (b)(4) 

7 l(b)(3) 7 USC §12 (CEA) (b)(4) 

8 irb)(3) 7 USC §12 (CEA) (b)(4) 

9 rb)(3) 7 USC §12 (CEA) (b)(4) 

lO rb)(3)7USC §12(CEA) (b)(4) 

11 Again, I wculd almost bet that this is 

12 ve--::y tongue-in-cheek, just the way we talked to 

13 eacr. otr.er. 

14 b)(4) 

15 b)(4) 

16 

17 

18 

1 9 ~fb1_(4_1 ~ 

20 Q So it sounds like barn, ycu did well? 

21 A Barn, I did well, and now he's saying 

22 because, (bl(4l 

~----------------------J 

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1 l(b)(3) 7 USC §12 (CEA) (b)(4) 

2 rb)(3) 7 USC §12 (CEA) (b)(4) 

3 fb)(3) 7 USC §12 (CEA) (b)(4) 

4 b)(4) 

S b)(4) 

6 lfb)(3)7USC §12(CEA) (b)(4) 

7 hb)(3) 1- I sold on a rally. And I'm saying true 

8 that, li:,e I called it perfectly, tr.at' s how I 

9 read that tc mean. 

1 0 Q b)(4) 

11 b)(4) 

12 A Seriously, you need to, you really, te, 

13 you need subtitles. I don't ~now what, te speaks 

14 :=luent jive. I don't knew wr.at this rr.eans. 

15 Q b)(4) 

16 b)(4) 

17 b)(4) 

18 A b)(4) 

19 

20 

21 

22 Q O~ay. So then at 16:04:50 you say S&P, 

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1 what is that? 

2 A Standards and Pocrs, which is a 

3 reference tc something te menticned ea~lie~. 

4 Q o:,ay. 

5 A And what did he, let rr.e, they will ma:,e 

6 us stand on the S&Ps at some point tere. I don't 

7 ~now what ttat means. I thin~ it means S&Ps will 

8 go r.igher, at scrr.e point. 

9 People underestimate ttei~ snea~iness, 

10 and I ttink that's a reference to, ch, God, I'm so 

11 embarrassed, that's a c:-e:=ec:-ence to the movie, wr.at 

12 is it, Mr. Deeds, wr.en r.e said you underestirr.ate 

13 rr.y sneakiness, r.is butler. 

14 So I don't ~now, I'rr just saying people 

15 don't, don't estimate tr.at these mar:,ets ac:-e 

16 really acting well. That's r.ow I read tr.at. 

1 7 Q o:,ay. You guys used a lot of rr.ovie 

18 quotes in your IMs en tte desk. 

19 A We did, yeah. It's hard to c:-ead, year .. 

20 Q Turning to tr.e next page, at 17:28:04, 

21 there's an entc:-y fc:-crr you, could you -

22 A Sure. 

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Q -- take us througt that. 

A tb)(3) 7 USC §12 (CEA) (b)(4) 

[b)(3) 7 USC §12 (CEA) (b)(4) 

Q What does come of:: mean? 

A (b)(3) 7 

II S (; S1? 

Q Okay. 

A l(b)(3) 7 USC §12 (CEA) (b)(4) 

l(b)(3) 7 USC §12 (CEA) (b)(4) 

fbJ(3) 7 USC §12 (CEA) (b)(4) 

fbJ(3) 7 USC §12 (CEA) (b)(4) 

fb)(3) 7 USC §12 (CEA) (b)(4) 

b)(3) 7 USC §12 (CEA) (b)(4) 

fbJ(3) 7 USC §12 (CEA) (b)(4) 

b)(3) 7 USC §12 (CEA) (b)(4) 

l(b)(3) 7 USC §12 (CEA) (b)(4) 

Again, I c:-ead this, I don't remember 

saying this. I'd read ttis to, again, bravado and 

tongue-in-er.eek saying I called the rr.ac:-ket so 

rigr.t. l(bJ(3J7usc §12(CEAJ (bJ(4l 

l(b)(3)7USC §12(CEA) (b)(4) 

rb)(3)7USC §12(CEA) (b)(4) 

MR. BENJAMIN: They, being the floor? 

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THE b)(4) \riiITNESS: 

BY MS. RYAL::..,: 

Q wr.at do ycu mean by tr.at, rb)(4) 

rb)(4) I" 

A (b)(4) 

fb1(4) IQ (b)(4) 

b)(4) ' 

b)(4) A 

b)(4) 

(b)(4) 

b)(4) 

fb1(4) 

(b)(4) Q 

b)(4) A 

Q b)(4) 

b)(4) 

A fb1(4) I 

Q o:,ay. Keep gcing. 

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A l(b)(3) 7 USC §12 (CEA) (b)(4) 

l(b)(3) 7 USC §12 (CEA) (b)(4) 

b)(3) 7 USC §12 (CEA) (b)(4) 

b)(3) 7 USC §12 (CEA) (b)(4) 

rb)(3) 7 USC §12 (CEA) (b)(4) 

(b)(3) 7 IIC:f'.&1?• 

That's how I c:-ead that. 

kb)(3) 7 USC §12 (CEA) (b)(4) Q Okay. L 

fb)(3)7USC§12(CEA)(b)(4) I at 17 : 28 : 217 

A l(b)(3)7USC §12(CEA) (b)(4) 

fb1(3) 7 IQ o:,ay. Barn, barr.? 

A Barn, barn. 

Q Doc tandle ttat cne? 

A That's a :=riend c:= ours, cfb_l(_7_l(C_l ____ ~I, 

whc is in the futures cpticns pit who Lrb_l(_4_1 ____ ~ 

(b)(4) 

Q Okay. And then at 17:43:36 (b)(3)7USC §12 W.FA1 1h11.11 

kb)(3) 7 USC §12 (CEA) (b)(4) h 

~L _____ ~I 

Al(b)(3)7USC §12(CEA) (b)(4) 

f~/\~/ 7 USC§12 (CEA) I- That is huge size, dude. 

So I read ttis to say, again, ttat I've 

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1 called the market sc right, rb)(3)7 USC §12 (CEA) (b)(4)1 

2 b)(3) 7 USC §12 (CEA) (b)(4) 

3 rb)(3) 7 USC §12 (CEA) (b)(4) 

4 l(b)(3) 7 USC §12 (CEA) (b)(4) 

5 b)(3)7USC §12 

6 Q b)(4) 

7 

9 A 

10 Q Okay. And then you tell hirr. wr.en you 

11 get a sec, call fbl(

~---~ 

7J(C) and say barr. from C. J.? 

12 A Yes, fbl(7)(C) I is ~---~ a guy narr.ed l(b)(7)(C) 

13 kb)(7)(C) I cl ____ ~ W1.o c went to UVA, I b 1 · e ieve, tea, d an 

14 lives in my home town. 

15 He is, he works at a hedge :=und in like, 

16 some debt, in a, I don't knew, a debt desk er 

17 something, but I do remerr.ber vaguely that he 

18 called me ta say silve~ looks ~eally goad at one 

19 point and he, he used tte term it leaks coiled up. 

20 That means it's a chart pattern and coiled 

21 rr.eans li:,e i:= ycu get a chart pattern and tr.ere's 

22 like, it's getting narc:-cwec:-, narrower, narc:-cwec:-, 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 na--::rower, li~e day to day it gets narrower -

2 MR. BENJAMIN: Tte --::anges a--::e 

3 converging? 

4 THE WITNESS: rr.e c:-anges ac:-e convec:-ging, 

5 (b)(4) 

6 l(b)(4) and I remembe--:: vaguely that 

rb)(7)(C) 7 said silver looks g--::eat, it's coiled, so -

8 BY MS. RYALL: 

9 Q So at 17:49:54fbl(7)(C) says? 

10 A Already did, told him the sna.<e was 

11 uncoiled and striking. That's a reference tc the 

12 thc:-ee of us I believe were probably hanging out 

13 and said silve--:: looks li:.:;:e a coiled snake. [bl(4ll 

b)(4) 14 

15 Lrb_l(_4_1 __ JI· I dcn't even knew if, I don't, I don't 

16 believe that Mc:-., fbl(7)(C) 1- has ever tc:-aded 

17 silver. I don't ~now. 

18 Q o:,ay. We' 11 move on to tr.e next cne. 

19 MS. RYA~L: Could you please mar~ ttis 

2 0 as Nurr.ber 8. 

21 (Jordan Exhibit No. 8 was rr.ac:-ked 

22 for identification} 

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BY MS. RYALL: 

Q For the record, this is a four-page 

exhibit and on the bottcrr. c:-ight of the first page 

it says JPM-AG 00218164 and the last page is 

218167, and take your tirr.e reading through that. 

A Thanks. 

Q Eave you read througt it? 

A Yes, I have. 

Q O~ay, g~eat. So en tte first page I'll 

dic:-ect youc:- attention tc the time stamp 13:46:27. 

A o:,ay. 

Q And it's an entc:-y by you. If you would 

read that, take us through it. 

(b)(4) A 

b)(4) 

fb)(4) 

(b)(4) 

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1 

2 

fb1(4) 

~--~ 

Q rb)(3) 7 USC §12 (CEA) (b)(4) 

3 

4 

s 

6 

7 

8 

b)(3)7USC §12 f'.FA1 1h11.11 

A rb)(3) 7 USC §12 (CEA) (b)(4) 

(b)(3) 7 I I C: ('_ 

Q l(b)(3) 7 USC §12 (CEA) (b)(4) 

(b)(3) 7 c:, 

USC · 

Al(b)(3)7USC §12(CEA) (b)(4)1· 

9 Q o:,ay. 

10 A b)(4) 

11 b)(4) 

12 

13 

14 

15 

(b)(4) 

Q b)(4) 

1 Lfb_l(_'________ JI? 

A b)(4) 

16 

17 

18 

19 

20 Q Going to the next page, 218165, the 

21 second line at 14:08:41. 

22 A ur.-hur .. 

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Q Ycu talk about Euro dollar bid and I'm 

just curious what tr.is means, (b)(4) 

~------~ 

tb)(4) Ib)(4) 

A Generally, call me so 

rr.any times, he'd want tc knew wr.at was going on in 

every market, sc I'd read ttis to say cl(b_l_(4_1 ____ ~ 

b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q And then tuc:-ning to the next page, 

218166, near the bottom at 16:29:11, could you 

read that line by ycu and tell us wr.at that rr.eans? 

A b)(4) 

b)(4) 

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It's just, I'm suc:-e l~b)(7)(CI, you know, I 

didn't really fellow this, I don't think I was 

talking about geld, but I tr.ink l(b)(7)(C)l(b)(4l 

l(b)(4) 

b)(4) 

b)(4) 

Q b)(4) 

b)(4) 

b)(4) 

[bl(4) I" 

b)(4) A 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

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1 Q Tr.at' s not something unusual in tr.e 

2 rr.ac:-ket? 

3 A b)(4) 

4 Q O~ay. If we go ta the last page, 

5 218167. And at line 19:36:55 you have an entry, 

6 could ycu c:-ead through that and take us thc:-cugh 

7 it. 

8 A Sure. I do, I do have some vague IT.emery 

9 of this day. 

lO rb)(3)7USC §12(CEA) (b)(4) 

11 rb)(3)7USC §12(CEA) (b)(4) 

12 tb)(3)7USC §12(CEA) (b)(4) 

13 b)(3)7USC §12(CEA) (b)(4) 

14 fb)(3)7USC §12(CEA) (b)(4) 

lS [b)(3)7USC §12(CEA) (b)(4) 

16 b)(3)7USC §12(CEA) (b)(4) 

17 kb)(3)7USC §12(CEA) 

kbl/41 

I b)(4) 

. 

18 b)(4) 

19 I remembec:- spea:,ing -- I den' t remerr.ber 

20 this exact day, but I c:-err.ember r.aving a 

21 conversation 4 with rb)(7)(C)I saying Ll(b-)(__1 ______ ~ 

22 b)(4) 

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b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

fb)(4) 

MR. BENJAMIN: (b)(4) 0 

(b)(4) THE WITNESS: 

b)(4) 

b)(4) 

b)(4) 

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And the way I c:-err.ember it is you had to 

:b)(4) let the exctange knew at 3:30 or, be~o~e 4 l

~--~ 

b)(4) 

So this, ttis looks to be -

Q Ttis is Lendon time. 

A This is Landen tirr.e, so I don't know 

(b)(4) what that exactly is, ~-----------J 

b)(4) 

b)(4) 

kb)(4) I 

~L--~· 

Q b)(4) 

rb)(4) 

IA b)(4) 

(b)(4) 

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b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

b)(4) 

b)(4) Q 

b)(4) 0 

b)(4) A 

b)(4) 

b)(4) 

(b)(4) 

~------------------------~ 

~rb_)(4_) ~ 

MR. BENJAMIN: And what was the scenaric 

that you were scrt c:= playing out here for Mr. 

fb1(7)(C) I" 

THE WITNESS: (b)(4) 

b)(4) 

(b)(4) 

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(b)(4) 

(b)(4) 

BY MS. RYAL::..,: 

Q b)(4) 

b)(4) 

0 

b)(4) A 

b)(4) 

(b)(4) Q 0 

b)(4) A 

(b)(4) 

b)(4) 

b)(4) 

rb)(4) 

b)(4) 

b)(4) b)(7)(C) 

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b)(4) 

(b)(4) 

b)(4) 

b)(4) 

fb1(4) 

(b)(4) MR. BENJAMIN: 

tb)(4) p 

THE WITNESS: (b)(4) 

b)(4) 

MR. SMITH: And rb)(7)(CI, ycu' c:-e referc:-ing 

to Mr. l(b)(7)(C) r 

THE WITNESS: l(b)(7)(C) 1. (b)(4) 

b)(4) 

b)(4) 

rb)(4) 

b)(4) MR. BENJAMIN: 

l(b)(4) 1, 

(b)(4) THE WITNESS: 

(b)(4) 

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b)(4) 

b)(4) 

BY MS. RYAL::..,: 

(b)(4) Q 

~? 

A (b)(4) 

b)(4) 

rb)(4) 

Q b)(4) 

(b)(4) 

b)(4) 0 

A b)(4) 

b)(4) 

b)(4) 

b)(4) 

MR. BENJAMIN: [b)(4) 

b)(4) 

b)(4) 0 

THE WITNESS: ~-

b)(4) MR. BENJAMIN: 

b)(4) 0 

THE WITNESS: (b)(4l 

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b)(4) 

(b)(4) 

b)(4) 

b)(4) 

(b)(4) MR. GRIMM: 

b)(4) 

0 

b)(4) THE WITNESS: 

b)(4) 

b)(4) 

(b)(4) MR. GRIMM: 

b)(4) 

rb)(4) r 

THE WITNESS: l(b)(4l 1-

(b)(4) MR. GRIMM: 

b)(4) 0 

(b)(4) THE WITNESS: 

MR. GRIMM: But the settlement price 

that determines whethe~ an option is in the rroney 

or cut a:= tr.e money, what tirr.e is tr.at deterrr.ined 

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at? 

THE WITNESS: I don't know. 

MR. GRIMM: Is it dete~mined at the call 

close? 

THE WITNESS: Tf'.e people that have the 

options on the floor have ta make ttei~ decision 

before 4 p.m., so I don't, I don't know what p~ice 

they use. 

You ~ust have to ma:,e a decision be:=oc:-e 

4 p.rr. It's got to be ~egistered with tte 

excr.ange. 

BY MS. RYAL::..,: 

Q And the options, if they're in tte 

rroney, they're automatically exercised unless you 

call the exchange and tell them not to? 

A I remember tr.at you r.ad to call the 

exctange eithe~ way, but I'm not sure. 

Q Why would somebody net exercise options 

that ac:-e in the rr.oney? 

A b)(4) 

b)(4) 

b)(4) 

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1 b)(4) 

2 

3 

4 Lfb_)(4_) -----~ 

5 Q So ycu said you looked at tc:-ading data 

6 ::a~ this date as you p~epa~ed fer today? 

7 A I did not. 

8 Q o:,ay. But you said (bl(4l 

~--------~ 

9 b)(4) 0 

~---------------~ 

10 A fb)(4) I11 Q o:,ay. 

12 MR. SMITH: So was Mr. rb)(7J(C) still r.ead 

13 of the prop desk at this time? 

14 THE WITNESS: He, I don't know i::: he was 

15 ever head of the pc:-cp desk. I mean r.e was a prop 

16 trader, but he was the r.ead of the global metals 

1 7 desk, sc I wanted tc speak to my boss about rr.y 

18 views on the mar:,et. 

19 MR. SMITH: Did you ever feel 

20 unccrr.fortable discussing any mattec:-s oc:- trading 

21 rr.atters or strategies with Mr· l(bl(7J(C) I? 

22 THE WITNESS: (b)(4) 

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~. 

MR. SMITH: (b)(4) 

~--------------~ 

(b)(4) 

THE WITNESS: (b)(4) ~----------~ 

MS. RYA::..,L: Okay. If you could mark 

this please as Exhibit 9. 

(Jordan Exhibit No. 9 was rr.ac:-ked 

for identification} 

BY MS. RYALL: 

Q Just take your tirr.e reading through 

that. 

A Sure. 

MR. SCHROEDER: Christine, can ycu just 

wait one second? 

BY MS. RYALL: 

Q Fer tte ~eco~d, ttis is a th~ee-page 

extibit and the bottom rigtt-hand corner tte bates 

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99 

number is JPM-AG 00220442 and it goes tr.rough 

220444. 

Did you have a chance to c:-ead through 

this? 

A Yes. 

Q Okay. ~et's gc to the last page of this 

exf'.ibit and if you could start at 8, tr.e tirr.e 

stamp 18:21:07, and take us thc:-cugh the 

conversation you' re having r.ere. 

I'm sorry, :::i~st of all, wtat do you 

recognize ttis exhibit to be? 

A Again, just a conve~saticn with my 

:::riend, Lrb_l(_7_1(C_l ___ ~I, on Febc:-uary 26tr., '09, 

starting at 7:47 a.m. 

Q And it's a Bloomberg instant chat? 

A Bloomberg IM again. 

Q Okay. Okay. 

A (b)(4) 

(b)(4) 

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1 that's tow I think c~ it. 

2 

3 

Q 

A 

o:,ay. 

rb)(3) 7 USC §12 (CEA) (b)(4) 

4 rb)(3) 7 USC §12 (CEA) (b)(4) 

S fb)(3) 7 USC §12 (CEA) (b)(4) 

G fb)(3) 7 USC §12 (CEA) (b)(4) 

7 

8 

9 

rb)(3) 7 us c §12 (CEA) (b)(4) 

Q Tr.at' s what l(bl(7J(C) 

Arb)(7)(Cllsaid that, and 

I says? 

I believe 

_ 

1 

he's, r.e 

10 was talking about crude eac:-liec:- and this was after 

11 crude had gene all the way down to 35 and it was 

12 on its way back up. 

13 And now he's saying -Q 

14 

15 

Okay. 

b)(4) 

At 19:54:26 you say -A 

16 b)(4) 

17 Q And then? 

18 A Barr .. 

19 Q Can ycu tell us wr.at you meant by that? 

20 

21 

A I interp~et 

we 11. (bl(4l 

ttat to mean I did very 

22 b)(4) 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 b)(4) Again, bravado, 

2 tongue-in-er.eek saying, I'm patting rr.yself en tr.e 

3 back. 

4 Q b)(4) 

5 A b)(4) 

6 b)(4) 

7 (b)(4) 

8 (b)(4) 

9 Q So did ycu leak at trading data for this 

10 day? 

11 A I don't ttink so. Did we? 

12 MR. BENJAMIN: I don't --::err.ember. 

13 THE \riiITNESS: I don't remember. 

14 BY MS. RYALL: 

15 Q Okay. 

16 MR. GRIMM: When you say, when ycu 

1 7 stated before they ,(new what happened, who do you 

18 thin~ ttey are? 

19 THE WITNESS: Just the market in 

20 general, you knew. I mean I always, sitting in 

21 that seat, you know, it's a ve--::y tough job, but 

22 just thinking about the rr.ac:-ket in genec:-al, like 

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I've called it right. 

BY MS. RYALL: 

Q Sc why would the market know that you 

had called it ~ight? 

A They wouldn't. Tf'.ey wouldn't. I'm ~ust 

saying you're constantly t~ying to, to, there's so 

rr.any moving pac:-ts tc a market, you' re trying to 

out thin:< othec:- people that are doing tr.e sarr.e 

thing as you so you're trying ta do well. 

So I'm just saying I called it well. 

That's tow I read it to say. 

MS. RYA::..,1: Okay. We' re going tc take 

just a couple minutes break. We' 11 go of:: tr.e 

record. 

(Recess) 

MS. RYA::..,1: Go back on the record. 

MR. BATTAGLIA: I just want to follow up 

witr. something different than tr.e IMs we were 

talking about. 

If you could ta:,e me tr.rough a :=oc:-

example. Let's say you r.ad a view on the mar:,et 

and you we--::e valued buying dips, selling rallies. 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 ::..,et' s say ycu were long 50 lots, because you were 

2 bullish andcl(b_l(_7_)(C_l __ ~I called up, one of your 

3 biggest customers, and te said I need you ta, he 

4 said I need to buy, I guess I'll go witt silve~, 

5 so 1000 lots, sc that's, what, 500,000 ounces? 

6 THE WITNESS: Ttat would be 5 million, 

7 b)(4) 

8 MR. BATTAGLIA: b)(4) 

~--------~ 

b)(4) 9 

b)(4) 10 THE \riiITNESS: 

11 

12 

13 MR. BATTAGLIA: b)(4) 

b)(4) 14 

15 THE WITNESS: lc(b_l(_41 __ ~ 

16 MR. BATTAGLIA: l(b)(4l I? ~---~ 

1 7 THE WITNESS: Yeah. 

18 MR. BATTAGLIA: ::..,et' s say he did that. 

19 Could ycu ta:,e me tr.rough your process then of 

20 what you would do, once he said something li:,e 

21 that, ycu'~e long 50 lots just jobbing, he called 

22 you up and said I need to buy -

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THE WITNESS: A million ounces? 

MR. BATTAGLIA: a rrillion ounces. 

THE WITNESS: b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

(b)(4) 

4 b_l(_41 _______________ ~b~,t-'~l( , 50fb_l(_1 ___ ~ 0 

b)(4) 

MR. BATTAGLIA: b)(4) (b)(7)( 

Cl 

, 3 

[b)(4) 1, 

THE WITNESS: (b)(4) 

b)(4) 

b)(4) 

tb)(4) 

~-----~ 

BY MS. RYAL::..,: 

Q rb)(4) -A 

l(b)(4) -Q 

-- b)(4) -A 

(b)(4) 

l(b)(4) i(b)(7)(C)rb)(4) 

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l(b)(4) 

b)(4) 

b)(4) 

Q And that's based on whec:-e you think the 

rr.ac:-ket is at because you've been watching it? 

A b)(4) 

b)(4) 

b)(4) 

b)(4) 

I 

(b)(4) 

b)(4) 

b)(7)(C rb)(4) 

~-----------------c.._------' 3 ~---~ 

(b)(4) 

MR. BATTAGLIA: b)(4) 

~----------~ 

b)(4) 

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~? 

(b)(4) THE WITNESS: 

b)(4) 

b)(4) 

l(b)(7)(C) rb)(4) rb)(4) 

b)(4) 

b)(4) 

rb)(7)(C) I (b)(4) 

(b)(4) 

b)(4) (b)(7)(C) 

b)(4) 

b)(4) 

b)(4) 

(b)(4) 

BY MS. RYAL::..,: 

Q Sc in that exarr.ple, 

example b)(4) 

I'rr. scrry, in that 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 rb)(4) 

2 A b)(4) 

3 b)(4) 

4 (b)(4) 

5 

6 

7 (b)(4) 

8 b)(7)(C b)(4) 

9 

10 MR. BENJAMIN: b)(4) 

11 rb)(4) 

12 THE WITNESS: b)(4) 

13 

14 

15 MR. BATTAGLIA: (b)(4) 

16 ~l(b_)(4_1 ----~lo 

17 THE 4 WITNESS: rb)( l 1. 

~------~ 

18 MR. BATTAGLIA: Than:.:;: ycu. 

19 BY MS. RYAL::..,: 

2 0 Q b)(4) 

21 b)(4) 0 

~--------------J 

22 A rb)(4) p)(7)(C)rb)(4) 

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b)(4) 

(b)(4) 

MR. BATTAGLIA: \riiould tr.ere ever be a 

scenario where you would move, toucr.ing upon what 

we talked about eac:-liec:-, I forget, we didn't use 

the woc:-d synthetic, but an internal EFP? 

MR. BENJAMIN: E=fective. 

MR. BATTAGLIA: Effective EFP. That 

would involve two sides. 

Was there eve-:: a scenario whec:-e you 

would be moving internally just one side, say, 

rr.oving bullion cut c:= ycur position intc another 

trader's position inte--::nally at J.P. Morgan? 

THE WITNESS: (b)(4) 

b)(4) 

b)(4) 

l(b)(4) lib)(7)(C ltb)(4) 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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(b)(4) 1 

b)(4) 2 

3 BY MS. RYAL::..,: 

4 Q What 's pcrtfclio? 

5 A b)(4) 

~-----------~ 

6 Q fb1(4) 

7 A b)(4) 

~-----------------~ 

3 ~fb_)(4_) ----~ 

9 Q Did te use any othe~ po~t:::olios? 

1 0 A b)(4) 

~--------------------~ 

11 b)(4) 

~--------------------------~ 

12 b)(4) 

13 So you' re asking about spot tc:-ades going 

14 :=rom one boc:.:;: tc another tc:-ade; is that what you 

15 asked? 

16 MR. BATTAGLIA: Co~rect. 

b)(4) 17 THE WITNESS: 

b)(4) 18 

19 

2 0 MR. BATTAGLIA: If you were doing a spot 

21 trade with someone en tr.e desk, would we expect to 

22 see you offsetting that trade in the futures 

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rr.ac:-ket? 

THE WITNESS: (b)(4) 

b)(4) 

b)(4) (b)(7)(C) b)(4) 

b)(4) 

b)(4) 

l\b)(7)(C) l(b)(4) I b)(4) 

(b)(4) 

b)(4) 

b)(4) 

MR. b)(4) BATTAGLIA: 

b)(4) 

(b)(4) 

THE WITNESS: l(b)(4) 1-

b)(4) MR. BATTAGLIA: 

b)(4) ' 

THE WITNESS :l(b)(4l 

4 MR. BATTAGLIA: rbl( l 

(b)(4) THE WITNESS: 

MR. BATTAGLIA: You testified yesterday 

b)(4) that 

b)(4) 

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b)(4) THE \riiITNESS: 

(b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

rb)(4) I 

(b)(4) 

b)(4) 

MR. BATTAGLIA: b)(4) 

rb)(4) I" 

THE WITNESS: ~ 

MR. BATTAGLIA: (b)(4l 

b)(4) 

b)(4) 

THE WITNESS: (b)(4) 

rb)(4) 

MR. BATTAGLIA: b)(4) 

(b)(4) 

rb)(4) f 

THE WITNESS: (b)(4) 

rb)(4) 

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BY MS. RYALL: 

Q rb)(4) I" 

b)(4) A 

(b)(4) 

b)(4) 

b)(4) Q 0 

b)(4) A 

~-' 

b)(4) 

b)(4) 

b)(4) Q 

b)(4) 

~? 

A b)(4) 

b)(4) 

(b)(4) 

b)(4) 

l(b)(4) 

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b)(4) 

b)(4) 

b)(4) 

Q b)(4) 

A (b)(4) 

~-----------------~ 

Q~. 

MS. RYAL::..,: Could we rr.ac:-k this, please, 

as Exhibit 10. 

(Jordan Exhibit No. 10 was rr.ac:-ked 

=a~ identification) 

BY MS. RYAL::..,: 

Q O~ay. For the record, this is a 

:=ive-page exhibit on the first page on the bottcrr. 

rigtt-hand corner it says JPM-AG 00236501 and in 

the last page is 236505. 

Do you recognize wr.at this docurr.ent is? 

A Don't remember it. It loc:.:;:s like a 

conversation that I had wit!"'. my :::riend, rb)(7J(C) 

rb)(7)(C) I, en Septembec:- 17tr., starting at 11:24 p.m. 

Q o::: wtat yea~? 

A 2009. 

Q Okay. And at the top it says to 

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Chc:-istophec:- Joc:-dan, c~ordan21@Bloomberg.net? 

A Yeah. 

Q Do ycu ~ecognize that E-mail or IM 

address? 

A I believe that was my IM address. 

Q For Bloombe~g chat? 

A For Bloombe~g chat and as I stated 

eac:-liec:-, I believel(b)(7)(CJI generally called me to 

start a chat. 

Q o:,ay. So starting on the :=ic:-st page, if 

I could di~ect you~ attention ta the line at 

12:05:35 and ycu have an entry there. r::: ycu 

could ta~e us ttrough ttat. 

A Sure. b)(4) 

(b)(4) 

(b)(4) 

Q rb)(4) 

b)(4) A 

b)(4) 

(b)(4) 

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b)(4) 

b)(4) 

b)(4) 

fb1(4) I 

MR. BENJAMIN: l(b)(4 ~-----~ l I? 

THE WITNESS: (b)(4) 

~----------~ 

b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

b)(4) 

Q (b)(4) 

A b)(4) 

(b)(4) 

b)(4) 

l(b)(4) 

Again, ve~y, just loose language, trader 

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b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

b)(4) 

Q (b)(4) 

b)(4) 

A (b)(4) 

b)(4) 

MR. PENICK: b)(4) 

b)(4) 

(b)(4) 0 

THE WITNESS: b)(4) 

b)(4) 

b)(4) 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 BY MS. RYALL: 

2 Q Okay, dropping down a =ew lines tc 

3 12:51:31. 

4 A Yeah. 

S Q (b)(4) 

6 l(b)(4) F ~----~ 

7 A rb)(3) 7 USC §12 (CEA) (b)(4) 

3 rb)(3) 7 USC §12 (CEA) (b)(4) 

9 Q (b)(4) 

~---------------~ 

1 0 b)(4) 

11 ~fb_)(4_1 ----~I" 

12 A Sledge. I don't know what that means. 

13 Q You say sledge, barn. \riihat is they 

14 didn't like that, my man? 

15 A fb)(3) 7 USC §12 (CEA) (b)(4) 

16 fb)(3)7USC§12(CEA)(b)(4) I 

l 7 fb)(3) 7 USC §12 (CEA) (b)(4) I 

18 fbl(3)7USC§12(CEA)(b)(4) I, it's ~ust, again, very trader 

19 tongue-in-cteek talk, li~e a mar~et that gets 

20 hammered, jarr.med, sledge hamrr.ec:-ed, lead piped. 

b)(4) 21 

22 fbl(

~------~ 

4l 1· I don't, I mean, again, it's a let 

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of bravado with a ycung :,id I'm trying to impress. 

That's how I c:-ead it. 

Q Well sledge sounds kind c:= extreme. 

A Yeah, and there are words that are very 

embarrassing to read. (bl(4l 

~--------------~ 

(b)(4) 

[b)(4) I 

b)(4) Q 

b)(4) 

[b)(4) I" 

AfbJ(3)7USC §12(CEA) (b)(4) 

rb)(3)7USC §12(CEA) (b)(4) 

fbJ(3) 7 USC §12 (CEA) (b)(4) IQ o:,ay. On the next page, at tr.e tcp, I 

guess it's a continuation ofLl(b_l_(7_1(_C_I __ ~ at 

13:10:33. Ee says lead pipe. 

A Yeah. I, I don't know if I b~cught this 

up yesterday but a lot a:=, a lot of te~ms 

originated from the :=locr and li~e, and I de 

recall whec:-e this term and it's something tr.at 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 they use for the mar:,ets on the :=locr, the market 

2 went a lot lower, it got lead-piped, you knew, 

3 like it went down aggressively, it went down fast. 

4 And so t:bJ(7)(CI' s saying tr.at to me, li:,e, 

5 wow, it went a lot lower l(b)(3)7USC §12(CEA) (b)(4) 

6 fb)(3) 7 USC §12 (CEA) (b)(4) 

7 fb)(3) 7 USC §12 (CEA) (b)(4) 

S rb)(3) 7 USC §12 (CEA) (b)(4) 

9 b)(3) 7 USC §12 (CEA) (b)(4) 

10 tb)(3)7USC §12(CEA) (b)(4ll. 

11 Q o:,ay. Skipping dcwn to tr.e bottom at 

12 13:56:47, you say just opened my bottom drawer 

13 where I ~eep my slime lead pipe. 

14 A Yeah, that's just, couldn't be mere 

15 embarrassing, but it's, that's a reference, l(bl(4l 

16 b)(4) and the mar:,et' s net going 

17 your way, ycu know, in the cld days rr.y boss, one 

18 of my basses would say you can, if you really have 

19 conviction, you've got room in youc:- bottom drawer 

20 to go a little more short or a little mere long. 

21 So b)(3)7USC §12 I'm just saying I have, (;FA1 /h1/41 

22 rb)(3)7USC §12(CEA) (b)(4) 

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b)(4) 

~fb_)(4_1 -----~I 

Q Well in keeping with that, tte bcttom 

just taL(ed about, l(b)(4) drawer that you 

b)(4) 

A b)(4) 

b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

b)(4) 

~fbl_('l __ ~IQ Did you eve~ brag to your f~iends that 

you did rr.ove the mar:,et? 

A I may have. I don't know. 

Q Did ycur friends -MR. 

GRIMM: Are you saying tr.at the 

metaphor of the lead pipe in tr.e bottom dc:-awec:-, 

that could be used to ~e=e~ to a tocl available to 

you to move the rr.ac:-ket i:= it's not going your way? 

THE WITNESS: I don't know. I mean 

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that's, like I said, I, that's, I tr.ink, 

over-thinking it. 

I'm ~ust, I'm exp~essing ttat I really 

thin:< tr.e market's going down. I have a stc:-cng 

conviction. That's, that's what I mean, like it's 

going tc get lead-piped. 

BY MS. RYAL::..,: 

Q Well -

A Net ttat I am going tc lead pipe it, but 

like I really have conviction. 

Q Well I don't ~now that it's 

over-thinking it, because if you go to the next 

page, 6503, at the very top you say removed it, 

now holding it, ha, ha? 

, k h (b)(3) 7 A Yea h . I d on t new. Just t at, 11 c,r ~1 ,, 

"r~"i;"~l"'-u_s_c_§1_

2

_(_c_EA_l_~I and I tr.ink if you read thc:-cugh 

the rest of this, I say that I got it wrong. I'm 

not suc:-e, but I thought I saw tr.at. 

But ~ust tr.at I have conviction [b)£3)!~~,sc 

kb)(3) 7 USC §12 (CEA) (b)(4) I 

~L -------~· 

MR. BENJAMIN: That's hew ycu' d 

interp~et it? 

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THE \riiITNESS: That's how I intec:-pret it. 

BY MS. RYAL::..,: 

Q o:,ay. Down on that sarr.e page at 

14:23:53 b)(4) 

b)(4) ? 

A Yeah, so -Q 

b)(4) 

~--------------~ 

~? 

A~ -Q 

fb1(4) 1· 

A __ b)(4) 

~------------------~ 

b)(4) 

b)(4) 

MR. PENICK: b)(4

~--------~ 

) 

(b)(4) 

THE \riiITNESS: Lfb_)(_41 ____ ~1· 

BY MS. RYALL: 

Q O~ay. If we s~ip to the last page, 

6505. At 16:18:28 b)(4) 

~--------------~ 

b)(4) 

A fb)(3) 7 USC §12 (CEA) (b)(4) 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 b)(3) 7 USC §12 (CEA) (b)(4) 

2 rb)(3) 7 USC §12 (CEA) (b)(4) 

3 rb)(3) 7 USC §12 (CEA) (b)(4) 

4 rb)(3) 7 USC §12 (CEA) (b)(4) 

5 fbJ(3) 7 USC §12 (CEA) (b)(4) 

6 MR. PENICK: I r.ave one. Going back to 

7 the :=ic:-st page, Decerr.ber 18th at 12: 51: 31. 

8 THE WITNESS: Yeah. 

9 MR. PENICK: You have, it leaks like a 

10 type, b)(4) 

11 b)(4) 

12 b)(4) 

13 THE WITNESS: (b)(4) 

14 b)(4) 

15 MR. PENICK: b)(4) 

16 b)(4) 

17 THE WITNESS: l(b)(3)7USC§12(CEA)(b)(4) 

lS [b)(3)7USC §12(CEA) (b)(4) 

1 9 rb)(3) 7 USC §12 (CEA) (b)(4) 

20 rb)(3)7USC §12(CEA) (b)(4) 

21 MR. PENICK: Thank you. 

22 MS. RYA::..,1: I tr.ink we' re up to Number 

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11, would you please mar~ ttat. 

( Jordan Exhibit No. 11 was rr.ac:-ked 

=~ identification) 

THE WITNESS: Okay. 

BY MS. RYALL: 

Q Did you r.ave a cr.ance to review that? 

A I have. 

Q Okay. And do you recognize what tr.is 

document is? 

A I recognize it tc be a conversation with 

tb)(7)(C) I L[ _____ ~ on Septerr.ber 18th, 2009, starting at 

12:54 en tte Bloomberg IM. 

Q And wr.o is fbl(7J(CJ I? 

Ajtbl(7J(C) is another fc:-iend of mine. 

Q o:,ay. On the :=ic:-st page that has the 

bates nurr.ber JPM-AG 00236596 and it goes to 6597. 

On the first page at 16:55:49, can you sta~t there 

and take us th~cugh this conve~saticn. 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
125 

1 A Yau have to look, so te's calling rre 

2 he's saying is everybody talking about 

3 Sterling. 

4 MR. BENJAMIN: That's at 16:55:01? 

5 THE WITNESS: (b)(4) 

~-----------~ 

6 

7 

8 

9 rb)(4) 1. 

10 (b)(4) 

11 BY MS. RYAL::..,: 

12 Q o:,ay, skip dawn to 17:03:06. 

lJ Arb)(3)7USC §12(CEA) (b)(4) 

14 rb)(3) 7 USC §12 (CEA) (b)(4) 

15 rb)(3) 7 USC §12 (CEA) (b)(4) 

16 fb)(3) 7 USC §12 (CEA) (b)(4) 

17 b)(3)7USC §12(CEA) 

bl/41 

18 l(b)(3) 7 USC §12 (CEA) (b)(4) 

19 rb)(3) 7 USC §12 (CEA) (b)(4) 

20 rb)(3) 7 USC §12 (CEA) (b)(4) 

21 rb)(3) 7 USC §12 (CEA) (b)(4) 

22 rb)(3) 7 USC §12 (CEA) (b)(4) 

and 

Eu~c 

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b)(4) 

b)(4) 

fb)(4) 

(b)(4) 

(b)(4) 

b)(4) 

Q S~ip down to 17:04:33, ttere's a line 

:=rom you. 

A b)(4) 

b)(4) 

(b)(4) 

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Q b)(4) 

~fb1_(4l __ ~lo 

A b)(4) 

b)(4) 

Q And what is the it ycu' c:-e tal:dng abcut? 

A Send it. It's ~ust a tec:-m, he sent it 

home. I :(DOW it to mean he did very well. He 

sent it home yestec:-day. It's slang, loose 

language and rb)(7)(C) is, really talks in this type 

of language. I mean I sat next to hirr. fer five 

years, so he saw me rr.ake and lose, make and lose. 

And if you did well, oh, wow, ycu sent it hcrr.e 

yesterday, that's tr.e context I :,now. 

(b)(4) 

b)(4) 

A b)(4) 

b)(4) 

(b)(4) 

Q Then he says you are, you really are a 

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1 beast, send it r.ome, it rr.isses its mommy? 

2 A Yeah, like I hope -Q 

3 And you say ha, ha, stay tuned. 

4 A I read that tc mean my conviction will 

5 be rigr.t, that I tr.ink I'm going tc be rigr.t but 

6 it's not wor:,ing out for me so far. That's r.ow I 

7 read that. 

8 Q o:,ay. 

9 MS. RYA::..,1: Can we mark this as 12. 

10 ( Jordan Exhibit No. 12 was rr.ac:-ked 

11 =~ identification) 

12 BY MS. RYAL::..,: 

13 Q Did ycu have a chance to look at this? 

14 A Yeah, I did. 

15 Q De you recognize what this is? 

16 A It loc:.:;:s like an E-mail tc my good 

17 fc:-iend in the market, fbl(7J(C) I, ~-----~· on Octcbec:-

18 lStr., 2009, at 7:41 a.m. in the rr.oc:-ning. 

19 Q And in the f~crr line it says 

O 2 (b)(7)(C) 

21 A Tr.at looks to be my E-rr.ail address. 

22 Q At J.P. Margan? 

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A Yes. 

is Q And wr.o rb)(7)(C) I" 

A l(b)(7)(C) I is scrr.ebcdy I've ,(nown fer 

pc:-cbably 12 years. He used to be at Ll(b_l(_7_)(C_I ____ ~ 

b)(7)(C) 

(b)(7)(C) I . , so he tc:-ades every l ~----------~ 

commodity in the world, :=rom my understanding. 

He's also somebody that I've, I would 

call f~crr tirre to tirre when I had a st~cng view on 

the rr.ac:-ket er wr.en I had an opinion because I 

would want to get his feedback because I found r.im 

to be c:-ight a let mere than he's wc:-cng and r.e' s 

somebody that I just really respect. 

Q wr.ere is r.e today? 

A Ee, I don't know what he's doing today. 

I know r.e' s no longer at l(bl(7J(C) I· I believe he 

just sits in an office and trades scrre a:= his own 

rr.oney, but I believe he had been retired by now -I 

rr.ean I'm pc:-etty suc:-e he retired :=rom Ll(b_l(_7_1(_c_1 __ ~I, 

so r.e just, but he water.es, :=rom what I 

understand, he water.es the markets all the time 

and usually has opinions. 

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Q wr.at is his age c:-ange? 

A I'd guess tb)(7)(C) I, I would guess. 

Q o:,ay. And could you read the substance 

of this E-mail and then take us thc:-cugh what 

you're talking about? 

A Sure. Again, this is :,ind of the way we 

spea~ ta each othe~. 

Hold on to your hat today, like I feel 

like today's, it's, something's going ta move 

today. I have my lead pipe cut in silver. Last 

nigr.t has tr.e feel a:= capitulation in everything, 

but I've been wrong before. Go easy. 

(b)(4) 

~----------------~ 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

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Q De you knew othec:- traders who use the 

tec:-m lead pipe (b)(4) ? 

~------------J 

A I mean, again, ttis came, I remembe~ the 

te~m f~crr wten, when I first started in the 

business oc:-iginating fc:-crr. tr.e flooc:-, which means 

(b)(4) tte way I understood 

it, it came :::rom a guy named ,rb_l_(7_1(_c_1 ____ Jlwhc used 

to say, because I had a reputation as usually 

being bullish, that's typically what I arr., and I 

remerr.ber vaguely that he, tr.at cne time I sold and 

he's like wtatever C.J. sells, it has tte ef:=ect 

-- I mean it has, tr.e market gets lead-piped, it 

goes down. 

But that's how I undec:-stand the terrr .. 

~-----~ 

tbJ(7)(C) I used it and I ~ust, to me it rr.eans ycu 

have, ycu have a strong view. I rr.ean, and I, I 

believe fbJ(3) 7 USC §12 (CEA) (b)(4) 

rb)(3) 7 USC §12 (CEA) (b)(4) 

b)(3) 7 USC §12 (CEA) (b)(4) 

rb)(3)7USC §12 rC:/\\ fh\fA\ 

Q So he would say that when you sold, you 

we--::e lead-piping? 

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A Ne, nc, net in that ccntext. It's, the 

mar:,et in general goes down. Ycu' c:-e not 

lead-piping because you're selling, and as I 

described my style earlier, b)(4) 

~-----------~ 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

rb)(4) 1. 

MS. RYA::..,1: If you could mar:< tr.is as 

Exhibit 13, please. 

(Jordan Exhibit Ko. 13 was marked 

for identification} 

THE WITNESS: Okay. 

BY MS. RYAL::..,: 

Q For the record, this is a one-page 

exhibit and at the bottcrr. c:-ight-hand cornec:- is the 

bates nurr.ber JPM-AG 00237747. 

What de you recognize this to be? 

A Ttis looks like a, even ttougt it looks 

in a dif~e~ent context, I believe ttis is a 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
133 

1 Blocrr.berg er.at with cl(b~)(~7~)(C_)~---~I• 

2 Q And who is ttat? 

3 A fbl(7)(C) lwas, was a pe~son that I 

4 woc:-ked with when I was at Morgan Stanley. He was 

5 (b)(7)(C) 

6 at Morgan Stanley and tten te started his own 

7 hedge fund. 

8 Again, similac:- to cl(b~)(~7~)(C~)----~~ somebody 

9 that I tave extreme respect =a~ that ~ust was, I 

10 always thought tad tremendous opinions en markets. 

11 Q Did te trade rretals? 

12 A I don't think he, I don't knew is the 

13 answer. 

14 Q O~ay. And kb)(7)(C) I ~----" was you? 

15 A That's me. 

16 Q o:,ay. 

1 7 A Eey -

18 Q Can you ta~e us ttrough ttis, yes. 

19 A So I thin~, is ttis the same date as 

20 ~'s? 

21 Q Yeah, this is October 15th, 2009. 

22 A Seems to be suggesting tr.at I have very, 

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134 

1 I have a strong conviction, I have a view. :bJ(J) 7 

USC 

fb)(3) 7 USC §12 (CEA) (b)(4) 2 

rb)(3) 7 USC §12 (CEA) (b)(4) 3 

rb)(3) 7 USC §12 (CEA) (b)(4) 4 

5 rb)(3) 7 USC §12 (CEA) (b)(4) 

6 b)(3) 7 USC §12 (CEA) (b)(4) 

7 fo)(3)7USC §12(CEA) kh\fA\ 

S rb)(3) 7 USC §12 (CEA) (b)(4) 

9 fbJ(3) 7 USC §12 (CEA) (b)(4) 

1 0 :b)(3) 7 

Q rb)(3) 7 USC §12 (CEA) (b)(4) 11 

12 A rb)(3)7USC§12(CEA)(b)(4) 

13 rb)(3)7USC §12(CEA) (b)(4) 

14 Q o:,ay. 

15 A b)(4) 

~------------------~ 

Q b)(4) 21 

22 rb)(4) I" 

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135 

1 A (b)(4) 

2 Q Okay. 

3 A (b)(4) 

~----------------~ 

rb)(4) 1. 4 ~--~ 

5 Q Okay. 

A (b)(4) 6 

(b)(4) 7 Q~------------------~ 

8  ? 

9 A (b)(4) 

10 (b)(4) 

b)(4) 11 

12 MR. BENJAMIN: (b)(4l 

~--------~ 

(b)(4) 13 

14 

15 

16 THE WITNESS: ~ 

17 BY MS. RYALL: 

18 Q (b)(4) 

b)(4) 19 0 

~------------~ 

2 0 A (b)(4) 

21 b)(4) 

~-----------------------~ 

22 (b)(4) 

~----------------------~ 

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b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

MR. GRIMM: (b)(4) 

b)(4) 0 

THE WITNESS: (b)(4) 

b)(4) 

b)(4) 

MR. PENICK: b)(4) 

b)(4) 

(b)(4) 

rb)(4) I" 

THE WITNESS: (b)(4) 

b)(4) 

(b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

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b)(4) 

MR. GRIMM: (b)(4) 

~------------~ 

b)(4) 

Lfbl_('l __ ~I" 

THE WITNESS: (b)(4) 

b)(4) 

(b)(4) 

b)(4) 

MR. BENJAMIN: And that's tf'.e tr.eta and 

gamma tr.at you referred to earlier? 

THE WITNESS: Tf'.at' s theta and gamma. 

MR. GRIMM: (b)(4) 

b)(4) 

BY MS. RYALL: 

Q~. 

ALJ? 

MR. GRIMM: (b)(4) 

b)(4) 

(b)(4) 

THE b)(4) \riiITNESS: 

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1 

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5 

6 

7 BY MS. RYAL::..,: 

8 Q b)(4) 

9 b)(4) 

10 b)(4) 

11 fb)(4) p ~-----~ 

12 A[b)(41!. 

13 Q Okay. 

14 A And again, I would say that I'rr sure 

15 this is exaggeration. This is a guy that I want 

16 to think that, you know, I just look up to and 

17 whatever. I don't, I'm not sure that I did these 

18 trades. 

1 9 Q b)(4) 

~------------------~ 

2 0 (b)(4) 

21 ~fb_)(4_1 -~F 

22 A b)(4) 

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139 

1 

2 

3 

4 Q o:,ay. Dc:-cpping dcwn to tr.e second to 

5 last line here at 11:31:11 p.m. 

6 A Sure. 

7 Q You say -

8 A I've taken my, I've ta:,en rr.y lead pipe, 

9 your old mini baseball bat cut c:= my bottom 

10 drawer, whac:,ing, I'rr. wr.acking this thing. 

11 b)(4) 

12 (b)(4) 

13 (b)(4) 

14 fb1(4) l(b)(7)(C) l(b)(4) 

15 t:b)(41 

16 Your old mini baseball bat, and this is, 

1 7 rb)(7)(C) I, when he was running the natural gas group 

18 at Morgan Stanley, we used to all just talk about 

19 whenever he got nec:-vous, he actually did have 

20 physically in his bottom d~awe~ like a little 

21 baseball bat and he was like, kind a:= li:,e a very 

22 quiet guy, from what I remembec:-, and whenever he 

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140 

would get a big position, he was a bigger trader 

than all of us, :=rom what I remerr.ber, he would 

hold his little baseball bat and go like this and 

stare at the screen. 

MR. BENJAMIN: When you say go like 

this, ycu mean tapping into his palm? 

THE WITNESS: Into r.is palm, that's what 

we said, ut-oh, he must have a big position, he's 

taken out his baseball bat. 

l(b)(3) 7 USC §12 (CEA) (b)(4) 

rb)(3) 7 USC §12 (CEA) (b)(4) 

rb)(3) 7 USC §12 (CEA) (b)(4) 

b)(3)7USC §12 

(;F 1 /h1/41 

l(b)(3) 7 USC §12 (CEA) (b)(4) 

rb)(3) 7 USC §12 (CEA) (b)(4) 

tb)(3) 7 USC §12 (CEA) (b)(4) 

rb)(3) 7 USC §12 (CEA) (b)(4) 

MR. SMITH: (b)(4) 

THE WITNESS: (b)(4) 

~. 

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141 

(b)(7)(C) b)(4) 

b)(4) 

rb)(4) 

(b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

MR. SMITH: \riias there any fundamentals 

in the market at this tirr.e that you saw? 

THE WITNESS: (b)(4) 

~----------~ 

(b)(4) 

b)(4) 

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(b)(4) 

(b)(4) 

fb)(4) 

b)(4) 

BY MS. RYAL::..,: 

Q So you've been telling us then ttat you~ 

whac:.:;:ing silvec:- wit!"'. a lead pipe means crb_l(_41 __ J 

A Well I'm using tte lead pipe, I read 

this to rrean same as his mini baseball bat, like 

whenever he'd get nervous, (bl(4

l 

b)(4) 

fb1(4) 

(b)(4) 

b)(4) 

b)(4) 

MR. GRIMM: How would ycu distinguish -the 

previous twc exf'.ibits were en tr.e sarr.e day? 

THE WITNESS: Yeah. 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
143 

1 MR. GRIMM: The morning to Lfb_l(_7_1(C_I ____ J 

2 you say I have my lead pipe out in silver. 

3 THE WITNESS: Yeah. 

4 MR. GRIMM: In the a:=ternoon to l(b)(7)(C) 

5 you say I, I've taken my lead pipe cut, I am 

6 whac~ing this tting? How would you distinguish 

7 between those two statements? 

8 MR. BENJAMIN: I:: ycu wculd. 

9 THE WITNESS: Tc me, yeah, I don't. 

10 MR. GRIMM: If you would. 

11 THE WITNESS: irb)(4) (b)(3)7USC §2018(c) 

fb)(4) (b)(3) 7 USC § 201 S(c) 12 

fb)(4) (b)(3) 7 USC § 201 S(c) 13 

14 MR. GRIMM: l(b)(4) (b)(3)7USC §2018(c) 

15 "rb_l(_'l_(b_l(_31_7_u_s_c_§_2_0_1_s(_c_1 --------------~I? 

16 THE WITNESS· (b)(4) • /h11:117 

17 MR. GRIMM: l(b)(4) (b)(3)7USC §2018(c) 

rb)(4) (b)(3) 7 USC § 201 S(c) 18 

19 THE WITNESS: rb)(4) (b)(3)7USC §2018(c) I 

rb)(4) (b)(3) 7 USC § 201 S(c) 1. 20 

~----------------------~ 

21 MS. RYA~L: If we could rra~k this please 

22 as 14. 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
144 

1 (Jordan Exhibit No. 14 was rr.ac:-ked 

2 =a~ identification) 

3 BY MS. RYALL: 

4 Q For the record, this is a seven-page 

5 exhibit and on the first page at the bottom rigr.t 

6 coc:-ner it says JPM-AG 00208612 and it gees through 

7 208618. 

8 MR. BATTAGLIA: Chc:-istine, can I do a 

9 :=allow-up on what he was taL(ing abcut en tr.e 

10 Octcbe~ lStt? 

11 MS. RYA::..,1: Can you just wait until he 

12 finishes ~eading ttis? 

13 MR. BATTAGLIA: Great. 

14 BY MS. RYALL: 

15 Q Did you r.ave a cr.ance to review that? 

16 A Yes, I have. 

1 7 Q Okay. And what do you recognize tr.is to 

18 be? 

19 A A Blocrr.berg er.at with rr.y boss, cfb_l(_71_(c_1 __ J 

20 rb)(7)(C) I, en August 19th, 2008, beginning at 10:33 

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I 

concentrate on the first two pages, if you could 

just start and take us through this conversation 

A Sure. 

Q -- start at tte beginning. 

A Well you can see by tr.e end 

on vacation and this is very typical of the way he 

would trade witr. me, Bloomberg er calling me up, 

so I'm assuming he's doing both and this is a busy 

day. 

So he's calling me :=ic:-st and saying any 

thoughts. 

MR. BENJAMIN: Or he's I Ming you. 

THE WITNESS: IMing rr.e, any thoughts. I 

guess we had a chat alc:-eady signed up. No, 

actually, at the beginning it says r.e invites me 

into the rocrr, so he's calling to talk to me and 

he's asking any thoughts. 

said hey, !g{(7)(1, deadly quiet r.ere. l(bl(I 

b)(4) (b)(3) 7 USC § 201 S(c) 

fbJ(4) (b)(3) 7 USC § 201 S(c) i!(bJ(7)(C) 1. fb)(7)(C) I was tr.e silver 

option trader with l(b)(7J(C) I in London. ~----~ 

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Q l(b)(7)(C) 

A fbl(7)(C) I- otr.erwise, dead. Sc 

I'm saying not much going on, crb_l(_4

1 ___ ~ 

(b)(4) 

fb)(4) 

b)(4) 

(b)(4) 

b)(4) 

fb1(4) 

Q rb)(4) 

A b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

Q wr.ich rr.etal are ycu talking about in 

this line? 

A When he says any thoughts, genec:-ally 

that ~ust means rretals, so I use it as a 

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broad-based gold, silver, Platinum, palladiurr .. 

(b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

l(b)(4) (b)(3) 7 USC § 201 S(c) 

b)(4) (b)(3) 7 USC § 201 S(c) 

l(b)(4) (b)(3) 7 USC § 201 S(c) 

Q b)(4) 

b)(4) 

A b)(4) 

li5il_ w 

Q Okay. 

A (b)(4) 

b)(4) 

Q o:,ay. 

A b)(4) 

b)(4) 

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rb)(4) (b)(3) 7 USC § 201 S(c) 

l(b)(4) (b)(3) 7 USC § 201 S(c) 

fb)(4) (b)(3) 7 USC § 201 S(c) 

l(b)(4) (b)(3) 7 USC § 201 S(c) 

fb1(4) l(b)(7)(C)l(b)(4) 

b)(4) 

b)(4) 

(b)(4) 

b)(4) 

b)(4) 

~b)(7)(C l(b)(4) 

(b)(4) 

MR. BENJAMIN: b)(4) 

~----------~ 

(b)(4) 

~----------------------~ 

(b)(4) 

THE WITNESS: l(b)(4ll. 

BY MS. RYAL::..,: 

Q Going to the next page, 8613. 

A tb)(4) (b)(3) 7 USC § 201 S(c) 

2 2 fb)(4) (b)(3) 7 USC § 201 S(c) 

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o!g{(7l( I says that? 

b)(4) A 

b)(4) 

b)(4) 

Q (b)(4) 

b)(4) 

rb)(4) I" 

A b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

rb)(4) I 

Q 0 

(b)(4) (b)(7)(C 

I 

Q o:,ay. 

b)(4) A 

(b)(4) 

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b)(4) (b)(3) 7 USC § 201 S(c) 

b)(4) (b)(3) 7 USC § • CH Qt~\ 

l(b)(4) (b)(3) 7 USC § 201 S(c) 

b)(4) (b)(3) 7 USC § 201 S(c) 

l(b)(4) (b)(3) 7 USC § 201 S(c) 

[b)(4) (b)(3) 7 USC § 201 S(c) 

[bJ(4) (b)(3) 7 USC § 201 S(c) 

Q l(b)(4) (b)(3) 7 USC § 201 S(c) 

[b)(4) (b)(3) 7 USC § 201 S(c) I" 

A [b)(4) (b)(3) 7 USC § 201 S(c) 

[b)(4) (b)(3) 7 USC § 201 S(c) 

b)(4) (b)(3) 7 USC § 201 S(c) 

l(b)(4) (b)(3) 7 USC § 201 S(c) 

l(b)(4) (b)(3) 7 USC § 201 S(c) 

l(b)(4) (b)(3) 7 USC § 201 S(c) 

b)(4) (b)(3) 7 USC § 201 S(c) 

b)(4) (b)(3) 7 USC § 201 S(c) 

(b)(4) (b)(3) 7 USC § 201 S(c) 

b)(4) (b)(3) 7 USC § 201 S(c) 

l(b)(4) (b)(3) 7 USC § 201 S(c) 

rb)(4) (b)(3) 7 USC § 201 S(c) 

(b)(4) (b)(3) 7 USC § 201 S(c) 

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1 b)(4) (b)(3) 7 USC § 201 S(c) 

2 rb)(4) (b)(3) 7 USC § 201 S(c) 

3 b)(4) (b)(3) 7 USC § 201 S(c) 

4 Q b)(4) 

5 A (b)(4) 

6 

7 

8 

9 

10 

11 ~l(b_)(4_1 _____ ~1[b)(7)(Cil~(b_)(4_1 ___ ~ 

12 Q (b)(4) 

13 A b)(4) 

~---------------~ 

14 b)(4) 

~-----------------~ 

1 5 Lfb_)(4_) ___ ~ 

16 Q All right, we don't need to go any 

1 7 :=uc:-thec:- than that. 

18 MS. RYAL::..,: o:,ay. I don't have much 

19 more tc do, so let's just run through. 

20 MR. BENJAMIN: Great. 

21 BY MS. RYAL::..,: 

22 Q While you were working at Lrb_l(_4

1 ____ ~I, 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
152 

1 did you ever engage in trading for the purpose c:= 

2 influencing the p~ice en COMEX? 

3 A No. 

4 Q b)(4) 

~------------------~ 

s b)(4) L_ ____________ _,, l(b)(7)(C) __ _ I? 

6 A b)(4) 

7 (b)(4) 

L_ ____________________ _, 

8 ~~)(71(,lcl(b_)(4_1 ___ ~ 

9 Q To ycur knowledge, did Mr. cl(b_l(_7_1(C_l __ ~leve~ 

10 

11 

12 A b)(4) 

13 Mr. l(b)(7)(C) lfb1(4) 

14 Q o:,ay' (b)(4l ? 

~-----------~ 

15 A As far as I know, no. 

16 

1 7 A 

~---------------------~ 

18 crb_)(4_1 ___ " 

19 Q O~ay. I just want to talk ~ust 

20 generally about some mar:,et activity you may have 

21 observed when ycu were trading. 

22 A Sure. 

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,-., (b)(4) 

' 

b)(4) 

(b)(4) 

A Did I, cculd you read that again, I 

apologize. 

Q b)(4) 

b)(4) 

fb1(4) I" 

A b)(4) 

4 Q Did you eve-:: observe r~b-)(_1 ______ ~ 

0 

~-----------------~ 

A b)(4) 

(b)(4) 

Q Eow c:=ten did you observe that? 

A I'd say b)(4l 

~--------~ 

b)(4) 

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b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

Q b)(4) In genec:-al, 

b)(4) 

(b)(4) 0 

A~. 

(b)(4) Q 0 

A (b)(4) 

Q [b)(4) I" 

A (b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) Q 

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1 b)(4) 

2 ctb_l(_41 __ J 

3 A b)(4) 

b)(4) 4 

,-., (b)(4) ? 5 "~----------~ 

A b)(4) 6 

7 

8 

9 

1 0 Q b)(4) 

11 ~fbl_('_I ---~I" 

12 MR. BENJAMIN: Lfb_)(4_1 __ ~1? 

13 BY MS. RYAL::..,: 

14 Q l(b)(4) 1-

15 A b)(4) 

16 l(b)(4) I 

1 7 Q b)(4) 

~--------------~ 

18 fb1(4) 

19 ALl(b_)(4_1 ______ J 

20 Q Okay. 

21 A (b)(4) 

22 (b)(4) 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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1 b)(4) 

~-----------------~ 

2 Lrb_l(_'I-~ 

3 Q To ycur knowledge, did tte traders ycu 

4 woc:-ked with at J.P. Moc:-gan eve-:: j{bl(4l ~------~ 

s 

6 

7 A b)(4) 

~-----------~ 

8 MR. PENICK: (b)(4) 

b)(4) 9 

~-------~ ' 

10 THE WITNESS: (b)(4) 

b)(4) 11 

12 fb1(4) I13 I was focused en my own tc:-ading. I, the 

14 answer is I don't know. 

15 BY MS. RYALL: 

16 Q Did you ever show a bid or offer en 

17 Globex that you didn't intend tc execute? 

18 A Only if it, I would only cancel 

19 something if I changed my mind er it was put in in 

20 er--::cr, but, no. 

21 Q b)(4) 

(b)(4) 22 

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b)(4) 0 

b)(4) A 0 

Q (b)(4) 

(b)(4) 

b)(4) 

[bl(4) 1-

b)(4) A 

b)(4) 

Q In ycur cpinion, why would l(b)(4) 

(b)(4) 0 

b)(4) A 

b)(4) 

b)(4) 

b)(4) 

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Q wr.en you say (bl(4l 

~------------~ 

b)(4) 

A l(b)(4) 1-

MR. PENICK: Is that b)(4) 

~--------~ 

(b)(4) ? 

THE \riiITNESS: b)(4) 

b)(4) 

MS. RYAL::..,: That's wr.at I referc:-ed tc as 

fb1(4) I· 

THE \riiITNESS: b)(4) 

b)(4) 

BY MS. RYALL: 

Q Was thec:-e b)(4l 

~----------------~ 

b)(4) 

b)(4) ? 

MR. BENJAMIN: Just as a general matte~? 

BY MS. RYAL::..,: 

Q As a general rratter. 

A Again, tr.at b)(4l 

~---------~ 

b)(4) 

~. 

Q o:,ay. Same questions, did you ever 

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b)(4) 

b)(4) 

0 

~--------~ 

A b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

b)(4) 

Q b)(4) 

(b)(4) 

A (b)(4) 

b)(4) 

(b)(4) 

Lfb-)(4_)_~ 

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,-., (b)(4) 

' 

rb)(4) 1, 

A b)(4) 

rb)(4) 

b)(4) 

(b)(4) 

b)(4) 

~ 

(b)(4) 

b)(4) 

b)(4) 

b)(4) 

l(b)(4) 

Q b)(4) 

b)(4) 0 

b)(4) A 

Q b)(4) 

b)(4) 

b)(4) ' 

A l(b)(4) 1~MR. 

BENJAMIN: Ycu mean just the time of 

day? 

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MS. RYAL::..,: Yeah. 

THE WITNESS: (b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

b)(4) 

[b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

(b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

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b)(4) 

(b)(4) 

Q b)(4) 

b)(4) 

~? 

A b)(4) 

(b)(4) 

(b)(4) 

Q b)(4) 

Did you ever notice that? 

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kb)(4) A I can't ~eally recall. L 

b)(4) 

But otterwise, no. 

MR. GRIMM: (b)(4) 

~-------------~ 

b)(4) 

THE WITNESS: (b)(4) 

(b)(4) 

b)(4) 

(b)(4) 

b)(4) 

MR. SMITH: (b)(4) 

~----------~ 

b)(4) 0 

~-------------------~ 

THE WITNESS: (b)(4) 

MR. BENJAMIN: (b)(4) 

MR. SMITH: (b)(4) 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
164 

kb)(4) 1 THE \riiITNESS: Ko, no. I 

~------~ 

2 

3 

4 MR. PENICK: How late did ycu ncrmally 

5 stay at wo~k at J.P. Morgan if you got in at 6:30 

6 or so? 

7 THE WITNESS: 5 to 5:30. 

8 MR. PENICK: So you stayed until the 

9 :=locr had actually closed? 

10 THE WITNESS: (b)(4) 

11 

12 

13 b)(4) 

14 ~fb_l(-4)--~ 

15 MS. RYA::..,L: I'm done, but I'd li~e to 

16 take five minutes ta tal~ ta my colleagues just to 

1 7 rr.ake sure tr.ere' s nc otr.er questions and then 

18 after tr.at I' 11 give you an opportunity to -

19 MR. BENJAMIN: Okay. 

2 0 MS. RYAL::..,: So of:: tr.e c:-ecoc:-d for five 

21 rr.inutes. 

22 (Recess} 

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165 

1 MS. RYAL::..,: I am :::inished with all tf'.e 

2 questions ttat I have. 

3 BY MS. RYALL: 

4 Q Anything you want to clac:-i:=y before we 

5 end hec:-e today? 

6 A I'd just like to than~ you guys and tell 

7 you that I did the best to answer all ttese 

8 questions openly and honestly and ttat's it. 

9 Thank you for being so nice, sc. 

10 MS. RYA::..,L: Okay. And de you have 

11 anything you'd like to ask tim to clarify? 

12 MR. BENJAMIN: No. But I would like to 

13 also express my appreciation for being permitted 

14 to ask questions as we went thc:-cugh. 

15 MS. RYA::..,1: Do your.ave any questions? 

16 MR. SCEROEDER: No. Just on the record, 

1 7 we' re c:-eguesting FOIA confidential treatrr.ent for 

18 the transc~ipt for both days and I'll fellow up 

19 witt a letter. 

2 0 MS. RYA::..,1: Okay. Tf'.ank you, and we are 

21 :=inished. 

22 We' 11 go of:: tr.e c:-ecoc:-d. Tf'.ank you. 

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166 

THE WITNESS: Thank you so much. 

(Whereupon, at 12:51 p.m., the 

testimony of CHRISTOPHER T. JORDAK 

was adjourned.) 

* * * * * 

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167 

CERTIFICATE OF NOTARY PUBLIC 

I, Cac:-leton J. Anderson, III de hereby cec:-tify 

that the witness whose testirrony appea--::s in the 

:=oc:-egoing hearing was duly swoc:-n by rr.e; that the 

testimony of said witness was ta:,en by me and 

thereafter reduced to print under my direction; 

that said deposition is a true record of the 

testimony given by said witness; that I am neitter 

counsel :=o--::, related to, nor employed by any of 

the pac:-ties to the action in which these 

proceedings we--::e taken; and, furtherrr.oc:-e, tr.at I 

am neitr.er a relative or employee of any attorney 

or counsel err.played by the parties r.ereto, nor 

:=inancially or otherwise interested in the cutccrre 

of this action. 

/s/Ca--::leton J. Anderson, III 

Kotary Public# 351998 

in and =a~ the Commonwealtt of Vi~ginia 

My Commissicn Expi~es: 

Noverr.ber 30, 2012 

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168 

ERRATA SHEET FOR TEE DEPOSITION OF 

Case Narr.e: 

CORRECTIONS 

Pg. ~n. Now Reads Stould Read Reasons: 

Reviewed by: Date: 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
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To the Witness: 

Please note any e~rors and the 

co~rections thereof, on this e~rata sheet. Any 

change er correction should have a reason. It may 

be a general reason, such as "Tc correct 

stenog~aphic e~ror," o~ ''To clarify the record," 

or "To conform with the :=acts." Once you have 

completed tte steet, signed and dated it, ~etu~n 

the sheet ta your atto~ney, not to the cou~t 

reporting agency. Attoc:-neys should exchange 

erc:-ata sheets among the pac:-ties. 

(9/16/2010 9:16 AM] Jordan, Christopher - Vol. 2 
Tran.,rrjnt Wnrrl Index 

b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
(b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
(b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
(b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
(b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
(b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
(b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
(b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
(b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
(b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:1 6 M1v1J Joraan, vr 1ristopner vo1. 2 
b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
(b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
b)(4) (b)(6) (b)(7)(C) 

[9/16/201 O 9:16 AM] Jordan, Christopher - Vol. 2 
Silver Price Manipulation 

Nowak, Michael Vol 1 

813/2010 10:04 AM 
1 ------------------------------ ---------X 

IN THE MATTER OF: 

2 

SIL VER PRICES 

3 

--X 

4 

140 Broadway 

5 New York, New York 

6 August 3, 2010 

10:04 a.rn. 

7 

8 

9 

10 

11 DEPOSITION of MICHAEL NOWAK, the 

12 Witness herein, taken by the COMMODITY 

13 FUTURES TRADING COMMISSION, pursuant to 

14 Agreement, held at the above-noted time and 

15 place, before a Notary Public of the State 

16 of New York. 

17 

18 

19 

20 

21 

22 

23 

24 

25 

1 

2 

3 APPEARANCES 

4 

5 COMMODITY FUTURES TRADING COMMISSION 

Division of Enforcement 

6 1155 21st Street N.W. 

Washington, D.C. 20581 

7 

BY: CHRISTINE M. RYALL, ESQ. 

8 EUGENE SMITH, ESQ. 

PAUL G. HA YECK, ESQ. 

9 

10 

11 SULLIVAN & CROMWELL, LLP 

Attorneys for Michael Nowak 

12 125 Broad Street 

New York, New York 10004 

13 

BY: KENNETH M. RAISLER. ESQ. 

14 WILLIAM SCHROEDER. ESQ. 

CHERYL WONG, ESQ. 

15 

16 

J.P. MORGAN 

17 245 Park Avenue, 11th floor 

New York, New York 10167 

18 

BY ARMAND NAKKAB, EXECUTIVE DIRECTOR 

19 

20 

21 

22 

23 

24 

25 

Page 1 Page 3 

2 (Privacy act was marked as 

3 Commission's Exhibit 1 for 

4 identification, as of this date.) 

5 M I C H A E L N O W A K , the Witness 

6 herein, having been first duly sworn by 

7 Kevin B. Jones, a Notary Public in and 

8 for the State of New York, was examined 

9 and testified as follows: 

10 EXAMINATION BY 

t t MS_ RY ALL: 

12 Q Could you state your name and 

13 spell it for the record. 

14 A Michael Nowak, M-I-C-H-A-E-L, 

15 N-O-W-A-K. 

16 MS. RYALL: There are just a few 

17 things I need to go through at the 

18 beginning of any of these testimonies. 

19 Just bear with me. 

20 THE WITNESS: Sure. 

21 MS. RYALL: This is an 

22 investigation by the United States 

23 Commodity Futures Trading Commission in 

24 the matter of Enright silver prices to 

25 determine whether there have been 

Page 2 Page 4 

1 Nowak 

2 violations of certain provisions of the 

3 Commodity Exchange Act and regulations. 

4 However, the facts developed in this 

5 investigation might constitute 

6 violations of other federal or state, 

7 civil or criminal laws. 

8 My name is Christine Ryall, and 

9 I am an officer of the Commission for 

1 O purposes of this proceeding. I have 

11 other CFTC staff with me today. 

12 Could you identify yourselves, 

13 please. 

14 MR. SMITH: Eugene Smith from 

15 the Commodity Futures Trading 

16 Commission. 

17 MR. HAYECK: Paul Hayeck. 

18 Q Mr. Nowak, you are represented 

19 by counsel today? 

20 A Yes. 

21 MS. RYALL: Could you guys 

22 identify yourselves. 

23 MR. RAISLER: Ken Raisler with 

24 Sullivan & Cromwell. 

25 MR. SCHROEDER: William 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 1 - 4 
Page 5 

1 Nowak 

2 Schroeder with Sullivan & Cromwell. 

3 MR. NAKKAB: Ari Nakkab, J.P. 

4 Morgan compliance. 

5 MS. WONG: Cheryl Wong, Sullivan 

6 & Cromwell. 

7 a Prior to today, we did provide 

8 to your counsel a document called statement 

9 to persons directed to provide information 

1 O pursuant to a Commission subpoena or 

11 voluntarily. I am putting that in front of 

12 you. It's marked Exhibit 1. 

13 Do you recognize that document? 

14 A Yes, I do actually. 

15 Q Have you had a chance to review 

16 that document before today? 

17 A Yes, I have. 

18 Q Do you have any questions about 

19 that document, about the substance of that 

20 document? 

21 A No. 

22 Q You understand that you are 

23 under oath? 

24 A Yes. 

25 Q That means you are swearing all 

Page 6 

1 Nowak 

2 your answers are true and correct? 

3 A Yes. 

4 a If at any time I ask you a 

5 question and you don't understand, will you 

6 let me know? 

7 A I will, yes. 

8 a If at some time you realize that 

9 a previous answer is incomplete or 

1 O incorrect, will you let me know? 

11 A Okay. 

12 Q Is there any reason that you 

13 can't give clear and complete answers today? 

14 A No. 

15 0 I expect we'll probably stop for 

16 lunch around one, but if you need anything, 

17 you want to stop, talk to your attorney, let 

18 me know, and we will go off the record for 

19 that. 

20 A Okay, sounds good. 

21 a The first thing I want to do is 

22 go through your background. If you can just 

23 start with college, where you went to 

24 college, what our ma·or was. 

25 A Sure. bJ(Bl (bJ(7J(CJ 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 

Page 7 

1 Nowak 

~ rb)(6) (b)(7)(C) 

5 Q Did you do any post-grad work? 

6 A No. I went directly from 

7 undergrad in the July after I graduated, I 

8 started working at J.P. Morgan. 

9 a Have you been there since? 

1 0 A I have, yes. 

11 Q The next part is your employment 

12 history, so that's very short. Let's go 

13 through what your positions have been there 

14 starting with when you first arrived. 

15 A Sure. The first job that they 

16 had me do, well, at least when I joined is 

17 you go through a rotational training program 

18 and you spend a year rotating through four 

19 different desks to get experience. Then you 

20 go through a classroom training program 

21 after that, and then you finally get placed 

22 on a desk about 18 months into it. My first 

23 desk placement was the natural gas options 

24 desk where I was the junior trader for those 

25 guys. 

Page 8 

1 Nowak 

2 Q The business or line of business 

3 that you went into, what was that called? 

4 A It was in commodities. 

5 Q How long was the training 

6 session? 

7 A The training session was about 

8 three or four months long. It was classroom 

9 training. And then after that -- so I spent 

1 0 about -- so that wasn't until 1998 that I 

11 finally really started working full time on 

12 the desk. I spent about a year on the 

13 natural gas desk, and then they actually 

14 shut down the oil and gas desks at the old 

15 J.P. Morgan, and they moved me over to the 

16 gold desk at the time. 

17 Q What year was that? 

18 A That was in -- I started in late 

19 '97, then it was late '98 that I moved over 

20 to the gold desk. It was about a year I was 

21 on the natural gas desk. I think that's 

22 actually, that's probably more accurate. 

23 Q In the first year you did 

24 rotations? 

25 A Yes, correct. 

Pages 5 - 8 
Page 9 Page 11 

1 Nowak 

2 0 What jobs did you do in the 

3 rotations? 

4 A I did one rotation in the 

5 interest rate swap trading desk, one 

6 rotation on the interest rate sales desk, 

7 one on a municipal derivatives desk, and one 

8 on FX spot desk for trading. 

9 0 Were you actually trading in 

1 O those positions, or were you supporting the 

11 traders? 

12 A I was supporting the traders, 

13 and helping things. 

14 Q What would you do to support 

15 them? 

16 A 

17 (b)(4) 

18 (bl(4l n e In eres ra e op I0n, 

19 sorry, the interest rate swaps trading desk 

20 (b)(4) 

21 

22 

23 

24 

25 

Page 10 

1 Nowak 

2~(b~)("4)---, S 

3 desk bJ(4l 

4 (b)(4) 

5 

6 

7 

8 

9 ~,,,---.,-;;o"w'""'1=y-;;o"u=o"t=at".n-", ""'y-;;ouc--~ 

10 call around to other counterparties? 

11 A l(b)(4) 

~ ~ rb)(4) 

14 And then on the interest rates, on the 

15 municipal derivatives desk (bJ(4l 

(b)(4) 16 

17 

18 V r-or c11enrs or u 1e oanl'I.. 

19 A ~b)(4) I 

20 (b)(4) 

21 

22 

23 u Do they still do that nowj(bl(4l 

24 (b)(4) I 

25 l(b)(4) r 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 

Nowak 

rb)(4) 2 A ! [b)(4) 

5 0 Going back to the natural gas 

6 desk, what did you do there? 

7 A I was the junior for the options 

8 trader there. So in that capacity the first 

9 job where I was actually ever able to trade. 

10 (b)(4) 

11 

12 

13 

14 

15 

16 

17 ~7r--,,g~o"t"t~e=,m~p~r-;;e~ss~1-;;o~n,.,~a"v~e~n"t--~ 

18 done any trading, but that natural gas 

19 options are pretty intense. 

20 A It's now intense. I happened to 

21 be there probably during the least 

22 interesting window of time. 

23 

24 

0 

A 

Before the hedge funds came in? 

fb1(4) I 

25 i(b)(4) 

Page 12 

Nowak 

~ lb)(4) 

6 0 So they got rid of that desk, 

7 and you got moved to the gold desk? 

8 A Yes. 

9 O What did you start doing there? 

1 O A I was the forwards trader,1(5i"(4il 

11 b)(4) 

12 

13 ~--------------~ bJ(4l L So I traded during New York hours, 

14 and someone else traded during the London 

15 hours. 

16 0 What are New York hours? 

17 A Usually get in around 7, 7 

18 o'clock in the morning or so, and until we 

19 go home around 5:00. 

20 0 And then what are the London 

21 hours generally? 

22 A They come in between 7:30 and 

23 8:00 London time, and they leave around 5 

24 o'clock their time. So there is overlap for 

25 about five hours. 

Pages 9 - 12 
Page 13 

1 Nowak 

2 0 There is also a Singapore office 

3 now? 

4 A That's correct. 

5 0 Was there one at that time? 

6 A There was, yes. 

7 0 What hours are they actually 

8 working? 

9 A They get in around 7 o'clock 

10 their time, which depending on your time 

11 zone it's either 7 or 8 our time. 

12 0 In the morning? 

13 A It would be their 7:00 a.m. is 

14 either 7:00 p.m. or 8:00 p.m. our time. So 

15 there is usually about maybe an hour and a 

16 half gap from the time New York goes home 

17 and Singapore comes in. 

18 0 You said you were working on the 

19 forwards. Could you describe for me what 

20 that is? 

21 A The forwards are when you buy 

22 spot and sell forward gold. So the 

23 difference between the spot price, which is 

24 deliverable in two days, and a forward 

25 price, which could be anywhere from three 

Page 14 

1 Nowak 

2 days to ten years. "b"l(4"1 _______ 7 i l(b)(4) 

I 

7 Q !(b)(4) 

8 !(b)(4) I 

9 l(b)(4) 17 

10 A b)(4) I 

b)(4) 11 0 r 

12 A b)(4) I 

(b)(4) 13 0 I 

14 l(b)(4) 17 

b)(4)1. 15 A 

(b)(4) 16 0 17 

17 A ~- 18 Q Anything else that you did in 

19 that position? 

20 A I mean there were other, 

21 other -- what do you mean by were there 

22 other things? 

23 0 What were your other duties 

24 besides handling the forwardsrbJ(4l 

25 fb1(4) I? ~-~ 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 

Page 15 

Nowak 

2 A b)(4) 

3 (b)(4) 

4 

5 

6 

7 0 You did that too? 

8 A Yes. 

9 0 Did your job changes at some 

10 time? 

11 A In 2000 I got moved to London, 

12 b)(4) 

13 

14 

15 b)(4) 1. So I moved over there in 2000. 

16 And then my job, my actual job function was 

17 the same, it was done out of London. And 

18 then in 2001 we had the merger with Chase, 

19 and that's when my job did change. I then 

20 became the o tions trader out of London .• ~l( 

b)(4) 21 

22 (b)(4) and then in March of 

23 2002 I moved back to the U.S. to be the 

24 U.S., the options trader back in the U.S. 

25 You might remember I said that we shut the 

Page 16 

1 Nowak 

2 U.S. desk down, but actually with the merger 

3 of Chase they kept their New York desk. 

4 0 The Chase desk? 

5 A So that's how I ended up coming 

6 back. 

7 0 Before you went to London, did 

8 you only trade gold? 

9 A I also did some silver, and on 

10 occasion platinum, palladium, but those were 

11 much more secondary to it. 

12 0 When you moved into options, did 

13 you do gold options? 

14 A I also did silver options at 

15 that oint, too, bJ(4J 

16 (b)(4) 

17 

18 

~~-~~--~==~=--~~ 19 Q We are up to 2002. Did your job 

20 change after that point? 

21 A So pretty much from that point 

22 until now I still run the options trading 

23 book. And then in 2005 I think it was, I 

24 may be off by a year or so, but I think it 

25 was 2005, I was also put in charge of the 

Pages 13-16 
Page 17 Page 19 

1 Nowak Nowak 

2 global tradin recious metals. 2 A fbI(71(CI ~ndLl(b_l(7_1(_c1_~~ 

3 Q (b)(4) 3 were the new ea le that we acquired through 

4 (b)(4) 4 Bear Stearns. (bJ(?J(CJ ·oined in I 

5 A (b)(4) 5 think 2005, and (bJ(?J(CJ at one point 

6 (b)(4) 6 was in New York and moved to London in 2007, 

7 7 I think. Again, I'm not exactly sure, but 8 ~-Q~~b~)("4)--------------r' 8 something around there. 

9 A So in New York there is myself, 9 0 We will go through them 

1 o l(bJ(?J(cJ I j{b)(7)(C) I Kb)(7)(C) 1 O individually a little bit later. ' ' 

And London it's b)(?)(C) 11 and (b)(?)(C) I, I 11 A Sure. 

I(b)(?)( IJb)(?)(C) I [(b)(?)(C) 12 12 Q What is the title of the ' (b)(?)(C) 13 I who I should note just joined 13 business group that you actually are 

14 us from l(bJ(?J(CJ I about a month ago, so he is 14 supervising right now? 

15 brand new, andl(bJ(?J(CJ I. And in 15 A Precious metals trading. 

16 Singapore it's KbJ(?J(CJ landl(bJ(?J(CJ I 16 0 Is that in a larger group? 

17 Q l(b)(4) I 17 A We are part of commodities. 

(b)(4) 18 I 18 Q fb)(4) P. 

19 ~? 19 A fbI(7)(C) 

20 A So take away!(bI(71(CI ~ he 20 O Where is he located? 

21 was not there. What part of 2008? 21 A In London. 

Q b)(4) 22 Q Last half of 2008, 22 

23 A This was post the Bear Stearns 23 (b)(4) 

b)(4 24 merger? 24 A 

25 Q Yes, 25 Q You still trade as well, 

Page 1 B Page 20 

1 Nowak 1 Nowak 

2 A So there was l(bJ(?J(CJ I who 2 correct? 

3 was on the desk, off the desk then on the 3 A Yes, that's correct, es, 

Q b)(4) 4 desk. I think he was off the desk during 4 

(b)(4) 5 that window, but I don't remember exactly 5 

b)(4) 6 what window when he was on the desk. 6 A 

(b)(4) 7 Q What did he do during the time 7 Q b)(4) 8 he was off the desk? 8 A 

Q b)(4) 9 A Mid office work, special 9 

10 projects for mid office. And then we had a ~ ~ [b)(4) 

11 junior guy namedl(bJ(?J(CJ !who is I 

12 basically a trading assistant. He was first 12 MR, RAISLER: fb1(4I I 

13 job out of college, kind of booked trades, 13 l(b)(4) I? 

14 did kind of admin for me. 14 MS, RYALL: (bl(4I 

(b)(4) 15 Q What about before -- 15 

16 A Also,i(bI(71(CI I was also part 16 A b)(4) 

17 of the team at that point, too. 17 (b)(4) 

18 0 What about before (b)(4) the Bear 18 Q 

19 Stearns merger, were there different people ~~ rb)(4) 20 there at that time? 

21 A There was -- 21 A [b1(4) 

22 0 Who did you acquire? 22 (b)(4) I 

23 A So who did we acquire in Bear 23 MR, RAISLER: l(b)(4) 

24 Stearns? 24 (b)(4) 

25 Q Yes, 25 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 17- 20 
Page 21 Page 23 

1 Nowak Nowak 

2 a 

3 l(b)(4) 

(b)(4) 

I? ~ rb)(4) 

4 A fb)(4) I 4 a fb)(4) 

~ rb)(4) I 

5 l(b)(4) 

6 f-\ 

17 

~b)(4) I 

7 a b)(4) ~ 7 l(b)(4) I. 

8 A b)(4) I 8 a b)(4) 

9 a (b)(4) I? 9 A b)(4) I 

10 A (b)(4) I 10 a b)( t? 

11 a {b)(4) I? fb1(4) I 11 A b)(4) I 

; ~ :(b)(41A l(b)(4) 

17 12 ()(4) 

13 

14 b)(4) I 14 a ~b)(4) 17 

15 a b)(4) 15 A (b)(4) 1 I 

16 (b)(4) ? 

17 A b)(4) iHb)(4) 

18 b)(4) 

19 a (b)(4) 19 a fb1(4) 

20 (b)(4) 20 A I 

21 A (b)(4) 21 b)(4) 

22 a 22 

23 A Is )(7)(C) ~b)(7)(C) I 23 

24 is (bl( 

25 (bJ(7J(CJ 

MN is myself, ~;( is l(bJ(7J(CJ 

is Kbl( l I, and 24 

25 

Page 22 Page 24 

1 Nowak Nowak 

2 a 

3 (b)(4) 

(b)(4) ; rb)(4) 

4 

5 

A 

a 

b)(4) 

(b)(4) 

4 Q 

5~ fb)(4) ~---------

6 (b)(4) ? 6 A fb)(4) I 

7 A ~---~ b)(4) 7 b)(4) 

8 a And are there also salespeople 8 

9 for precious metals? 9 

10 A Yes. 10 

11 Q ~b=)(4~)-------~- 11 a b)(4) 17 

12 

13 

A 

Q 

b)(4) . 

7('""b)'"(4'°) --------~ 

12 

13 

A 

(b)(4) 

b)(4) I 

14 l(b)('i? 

15 A j{bl(4) I 14 

15 

16 O You call them marketers, 16 

17 correct? 17 

18 A Yes. fbl(4I I 18 

19 (b)(4) 19 a b)(4) I? 

20 20 A b)(4) I 

21 21 a b)(4) f 

22 22 l(b)(4) ,, 

23 ~-.,...,,=-----,----~ 24 a (bl('I I? 

25 A ~(b=)(4~1-----~-~I 

23 A 

24 a 

25 Kb)(4) 

fb)(4) I 

fb)(4) 

I' 

I 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 21 - 24 
Page 25 Page 27 

1 Nowak Nowak 

2 A fb)(4I I 2 A ~b)(4) I 

3 MS. RYALL:l(bl(41 I 3 b)(4) 

4 (b)(4) 4 

5 5 

6 6 

7 a fb)(4) I 7 

8 

9 

(b)(4) 

A b)(4) I (? 8 

9 

10 a b)(4) I 10 b)(4) fb)(7)(C) I 

11 A b)(4) I 11 b)(4) 

12 (b)(4) 12 a b)(4) 17 

13 13 A b)(41j 

14 

15 a b)(4) ? 

14 

15 

a 

A 

~ is i(b)(7)(C) 

~ is {b)(7)(C) 

r I. fb)(4) I 

16 A b)(4) 16 Kb)(4) ~b)(7)(C) ll(b)(4) 

17 (b)(4) 

18 I 17 ~b)(4) 18 a 

b)(7)(C) 

b)(4) 

ll(b)(4) 

l(b)(7)(C) I? 

I 

19 a (b)(4) I 19 A b)(4) I 

20~ 

21 A fb)(41 I 

20 

21 

(b)(4) 

b)(4) 

I .,\(' 1Kb)(4) (b)(7)(C) 1

fb)(7)(C) 

l,l~l"b)('I 

KbJ(4) I 

I 

22 (b)(4) 22 b)(4) I 

23 23 b)(4) 11~~)(1, l(b)(7J(CJ I l(b)(7)(C)I 

24 24 (b)(7)(C) 1

(b)(4) I 

25 25 (b)(4) I 

Page 26 Page 28 

1 Nowak 1 Nowak 

; rb)(4) 2 b)(4) 

3 

4 Q ~fb_)(4_1 _________ ~ 4 

5 !(b)(4) I? 5 

6 A ~b)(4) 6 a fb)(4) 

7 

8 

(b)(4) 7 b)(4) 

8 I 

9 g {b)(4) I? 

10 a (b)(4) 10 A (b)(4) 1 I 

11 (b)(4) I? 11 l(b)(4) I 

12 A fb)(4) I 12 a l(b)(4) I 

13 (b)(4) I 13 (b)(4) r 

14 

15 

a 

(b)(4) 

(b)(4) 

I( 

I 14 A 

15 !(b)(4) t 

fb)(4) I 

16 A (b)(4) I 16 a b)(4) 

17 a (b)(4) I 17 (b)(4) ? 

18 A (b)(4) 18 A b)(4) 

19 (b)(4) 19 (b)(4) 

20 20 a b)(4) 

21 

22 

23 

21 A 

22 a 

23~ 

er b)(4) 

24 a ~b)(4) I 24 A ~b)(4) 

25 l(b)(4) I? 25 a fb)(4) r 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 25 - 28 
Page 29 Page 31 

1 Nowak 

2 ="A~_~ftb_lt4_I ________ ~I-~ 

3 (b)(4) 

4 

5 

6~--------------~ 

7 0 Do you also have analysts and 

8 clerks that help out the traders? 

9 A Usually it's the -- no, there is 

1 O erson, no. bJ(4l 

b)(4) 

~l(b~l(7~I(~C~I --~I left at some time 

17 to go do back office? 

18 A First it was~b"l(7~I(~C'I --- and 

19 then this was KbJ(7J(CJ I and (bJ(7J(CJ 

20 l(bl(7J(CJ I together, then (bJ(7J(CJ left, 

21 and then (bl(7J(CJ left to go become an 

22 actor, andl(bl(7J(CJ lcame back. 

23 0 Wasl(bJ(7J(CJ I in training with 

24 l(b)(7)(C) I? 

25 A No. l(bJ(7J(CJ I is older than 

Page 30 

1 Nowak 

(b)(7)(C) 2 I 

KbJ(4) 3 Q I 

b)(4) 4 I? 

5 A l(b)(4) 

6 (b)(4) I 

(b)(4) 7 Jb)(7)(C) I 

(b)(7)(C) b)(4) 8 lb)(71(C! 

9 (b)(7)(C) 

10 Q 

11 =----'------,,,---~ ltb)(4) I? 

12 A 

13 Q 

14 (b)(4) ? 

15 A 

16 Q 

17~ 

~b)(7)(C) 18 A I in London, and 

19 then (bJ(7J(CJ 

b)(4) 20 Q ? 

b)(4) 21 A I ~I l(b)(4) 

Nowak 

2 b)(4) 

3 

4 

5 

6 

7 

8 MS. RYALL: ibl(4I I 

(b)(4) 9 

10 

11 

12 

13 

14 Q ~b)(4) 

15 KbJ(4) I? 

fb)(4) 16 A I 

17~ 

18 Q b)(4) 

19 ltb)('IP ~--------~ 

20 A b)(4) 

21 Q ~b')(4~)-"------~? 

22 A bJ(4l 

23 Q "=b)~(4")-~---~? 

24 A !bl(4I 

25 l(b)(4) 

Page 32 

1 Nowak 

2 I(b)(4) t 

KbJ(4) ~;( L~l( b)(7)(C) 3 ' [iiillJ b) b)(7)(C) , Kb)( (b (b)(7)(C) 

5 

4 

(b)(7 b)( " b)(7)(C) I b)( I(b)(I b)(7)(C) I. 

I 

b)(4) 6 

7 

8 Q KbJ(4) I 

9 fb)(4) P=-------, 10 A bJ(4l 

11 (b)(4) 

12 

13 Q 

14 !b)(4) r 

b)(4) 15 

16 

A 

Q ~ Kb)(4) t( 

17 A fb)(4) I 

18 b)(4) 

19 

20 

21 

fb)(4) 22 Q I 

23 l(b)(4) i? 

b)(4) 24 A 1. 

b)(7)(C) 25 Q I works in London? 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 29 - 32 
Page 33 Page 35 

1 Nowak Nowak 

2 A Yes. 2 usually for a two-way price where they could 

3 a Is he a precious metals trader? 3 either buy it or sell it, and we will take 

4 A He was. Now he is a proprietary 4 the other side of that trade and do our best 

5 trader. 5 to work out of the risk and hopefully make 

6 a I? 6 money in the process. 

7 A 7 Q How do you go about doing away 

8 with the risk? ~r)(4) 

9 A We will hedge it either on the fb)(4) 10 a 1 O futures exchange or over the counter 

11 l(b)(4) I? 11 markets. 

12 A "b~)("4)--'? 12 Q Who are the clients that are 

(b)(4) I 13 a 13 coming to you for market making? 

14 A fbJ(4) 14 A We have mining companies, we 

15 a (b)(4) ? 15 have central banks, we have hedge funds, and 

16 A (b)(4) 16 we have just general corporate, you know, 17 !(b)(4) 17 consume any one of the metals. i(b)(4) 18 a 18 Q When you say there are clients, 

19 (b)(4) 19 what does that mean? Do they have an ISDA 

b)(4) I 20 A 20 agreement with you guys? Do they do banking 

b)(4) I? 21 a 21 services with the rest of the bank? 

22 A b)(4) I 22 A I don't know what all the 

23 MS. RY ALL: bJ(4l 23 clients actually do to get set up. That's 

b)(4) 24 24 usually the salespeople. It's the 

25 25 salesperson's responsibility to make sure 

Page 34 Page 36 

1 Nowak 1 Nowak 

2 (b)(4) b)(4) 2 

3 3 

4 c~----Q-'-_'---__ -;(_b_l_(_4_1-=.-=--=--=--=--=--=--=--=--=--=--=--=--=--=-'=--=--=-~-=--=--= 4 0 So salespeoplel.(bl(4I . 

5 b)(4) 5 Kb)(4) 1? 

6 (b)(4) ? b)(4) I 6 A 

7 A b)(4) (b)(7)(C) b)(4) 7 a t? 8 Q ~(-b)-(4-)---~----?c--'. 8 A b)(4) I 

9 A (b)(4) 9 a b)(4) 1? 

b)(4) 10 A I i; l(b)(4) b)(4) 11 a I 

12 ()(4) 

13 Q fb)(4) 13 ? 

14 (b)(4) 14 A ~b)(4) I 

15 (b)(4) ? 15 b)(4) 

16 A b)(4l 16 "=-~~---~--~~ 17 Q So just on a sort of 10,000 foot 17 

18 level, what is the business of your metals 18 

19 group? 19 

20 A We make markets in gold, silver 20 

21 and platinum, palladium, spot forwards and 21 

b)(4) 22 options for our client base. 22 a I 

23 Q What do you mean by make 23 KbJ(4) 

24 markets? 24 Kb)(4) (? 

25 A ~(b-)(4-)--------~ 25 A Kb)(4) I 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 33 - 36 
Page 37 

1~~ 2 l(b)(4) I Nowak 

3 Q l(b)(4) I? 

4 A fb)(4) 

(b)(4) 5 

6 

7 

8 

9 Q fb)(4) I 

l(b)(4) 10 (b)(4) 11 !? 

I 

12 A l(b)(4) I 

13 (b)(4) 

14 

15 

16 

17 

18 

19 Q fb)(4) I 

20 l(b)(4) 

21 i(b)(4) I? 

22 A lrb)(4) 

23 Q !(b)(4) 

24 l(b)(4) !? 

25 A b)(4) 

Page 38 

1 Nowak 

2 ~(b~)(4~)---------------~ 

3 

4 

5 Q When you say spot business, what 

6 do you mean by that? 

7 A Spot trading is just physical 

8 gold deliverable in two days. So it's the 

9 equivalent of trading actually euro price in 

10 the foreign exchange market or yen. It's 

11 the price of gold. Largely speaking if 

12 someone is looking at the price of gold 

13 that's what they're talking about, the spot 

14 price. 

15 Q Is there physical delivery 

16 though? 

17 A Yes. 

18 0 Physically in an accounting 

19 sense they are actually moving the gold? 

20 A Yes. ~bJ(4l 1 

21 (b)(4) 

22 

23 ~------------~ 

24 0 Are those deliveries in London? 

25 A Correct. 

Page 39 

Nowak 

2 0 For spot? 

3 A Yes. 

4 0 Do they ever happen in New York? 

5 A It can, but the vast majority of 

6 it does not. That would be a non-standard 

7 delivery. 

8 0 I want to go through the roles 

9 of the various traders you have mentioned. 

10 A Sure. 

11 0 Let's start with Mr. l(bJ(?J(CJ 

12 !(b)(7)(C) I. 

13 A Yes. 

14 Q What is his role within the 

15 metals group? 

16 A He runs the forwards book out of 

17 New York. (bJ(4l 

18 (b)(4) 

19 

20 ~------------~ 

21 Q So he is in New York. So what 

22 are the hours that he's generally trading? 

23 A 6:45 a.m. to 4:00 p.m. 

24 0 Is that generally true for all 

25 of the New York traders? 

Page 40 

1 Nowak 

2 A Give or take a half an hour. 

3 Q What about!(bl(71(CI !? 

4 A He trades spot gold out of 

5 London, and the forwards gold out of London. 

6 Q You said Mr. f:bJ(?J(CJ ldoes 

7 silver and gold. Does he also do palladium 

8 and platinum? 

9 A No. 

10 EXAMINATION BY MR. SMITH: 

11 Q Any other metals? 

12 A His market making 

13 responsibilities are only in gold and 

14 silver. 

15 EXAMINATION BY MS. RYALL: 

16 Q Mr. [bI(71(CI !only does gold? 

17 A Only does gold, correct. Spot 

18 and forwards. So just to differentiate, he 

19 does s at trading which is not done by l(bJ(?J(I 

20 (b)(?)(C) 

21 0 Just for the court re orter's 

22 assistance, l(bJ(?J(CJ I is (bl(7J(CJ 

23 A Yes. ~----~ 

24 Q Let's go tocKb~l(~71~(C~I --~ 

25 l(b)(?)(C) I 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 37 - 40 
1 Nowak 

2 A Yes. 

3 Q What's his role? 

4 A fbJ(4) 

~ rb)(4) 

7 Q Can you describe for me how that 

8 works? 

9 A ~b")(4"1---------~ 

10 (b)(4) 

11 

12 

13 

14 

15 

16 

17 Q Aren't some of the ETF prices 

18 off from the spot price anyway, 

19 administrative expenses, et cetera? 

20 A Correct. l(bJ(4J 

21 (b)(4) 

22 

23 

b)(4) 24 Q 

25 (b)(4) ? 

1 Nowak 

2 A fiw4il 

4 

3 

l(b)(4) 

Q 

I? ~ 

5 A l(b)(4) I 

6 Q :(b)(4) 

7 l(b)(4) l1 

(b)(4) 8 A 

g (b)(4) 

1 Q (b)(4) 

(b)(4) 11 Q 

12 l(b)(4) 

13 l(b)(4) f 

14 A fb)(4) 

15 (b)(4) 

16 

17 

(b)(4) 18 Q 

(b)(4) 19 

20 (b) . 

21 A b)(4) 

22 (b)(4) 

23 

24 

25 

Page 41 Page 43 

Nowak 

2 Q Let's go tofbJ(7J(CJ I 

3 A Okay. He is in Singapore, and 

4 he does a little bit of everything. So 

5 everything except spot gold and spot silver, 

6 so he does forwards, he does options, he 

7 does platinum and palladium, he does base 

8 metals, he does everything else. 

9 Q Why is it that he does a little 

10 bit of everything? 

11 A b)(4) 

12 (b)(4) 

13 

14 

15 

16 Q What hours is he actually on 

17 duty? 

18 A He gets in around 6:00 p.m. New 

19 York time, which is 6:00 a.m. London time, 

20 and he usually leaves around 4 o'clock 

21 Singapore time. 

22 Q What time is that here? 

23 A So that's 4:00 a.m., that's 

24 9:00 a.m. London time, so he will overlap 

25 about an hour or so. I mean it depends on 

Page 42 Page 44 

Nowak 

2 the day. 

3 Q Does he trade on the New York 

4 exchanges? 

5 A He will trade on the electronic. 

6 Q GLQBEX? 

7 A b)(4) 

8 EXAMINATION BY MR. HAYECK: 

9 Q Was he doing that in 2008? 

10 A In 2008, yes, we had electronic 

11 trading. 

12 Q Has anything changed about his 

13 responsibilities since 2008? 

fb)(4) 14 A I 

15 b)(4) 

16 

17 

18 

19 

20 

21 

22 EXAMINATION BY MS. RYALL: 

23 Q Did your group also trade on 

24 EBS? 

25 A fb1(4) I 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 41 - 44 
Page 45 Page 47 

1 Nowak Nowak 

2 a Who does that? 2 York. After the merger I split the job, and 

3 A An" one of the spot traders, so 3 he was only the silver trader, and!(5i(4il 4 (b)(7)(C) I, Kb)(7)(C) I, (b)(7)(C) 1.1(b)(4)1 4 (b)(4) 

5 (b)(4) 5 I 

fb)(4) 6 6 a 

KbJ(4) 7~~-------==~-r 7 ? 

8 0 Let's go back fb)(4) to l(b)(7)(C) I 8 A I 

9 l(bl(7l( I. Was his position or duties any 9 Kb)(4) I 

b)(4) 1 O different in 2008? 10 a 

11 A No. 11 Kb)(4) 1? 

12 0 How aboutl(b)(7)(C) r 12 A ~b)(4) I 

13 A He was also doing silver spot 13 b)(4) 

14 forwards back then. 14 

15 0 What hours is he actually at 15 

16 work in the London office? 16 

17 A About 7:30 London time until 17 

18 5:30 London time. 18 

19 O And Mr.""f:b"l(7"1(~C'I 71, how was his 19 

20 position different in 2008 when he first 20 

b)(4) 21 came over from the merger? 21 a I? 

b)(4) 22 A Not materially different. 22 A 

23 0 Until present has it changed at 23 !(b)(4) 

24 all? 24 a Kb)(4) 

fb)(4) 25 A No. 25 A 

Page 46 Page 48 

1 Nowak Nowak 

2 O l(bJ(7J(CJ I, what's his role? 2 b)(4) 

3 A Currently he's the head of 3 

4 global pro rietar tradin for commodities. 4 

5 Q b)~) ? 5 LE_X_A_M_I-NA_T_I_O_N_B_Y_M_R_. -s-M-IT_H_: ___ ~ 

6 A b)(4 6 Q b)(4) 

7 Q "(~b)~(4~)------~ 7 b)(4) 

8 A (b)(4) 8 b)(4) 

9 b)(4) 9 A (b)(4) 

10~~-~~~~-~~~~--~ 1 Q (b)(4) 

11 a 11 

12 12 ~--------------~ 13 13 EXAMINATION BY MS. RYALL: 

14 ~(b~)(4~)-~--------~--~ 14 Q b)(4) 

15 a L(b~l(_71_(c_1 ----~' he is no 15 (b)(4) 

16 longer with the firm? 16 17 ~b~)(4")----------,c?~---~ 17 A That's correct. 

18 0 Do you recall when he left? 18 A Can you ex lain that. 

19 A I think it wasfbl(7J(CJ 19="Q~_M=r.=b)~(7~)(C~(b_)(4_1 _____ ~-7 

O What were hLis_d_u_t-ie_s_fr_o_m_2~0"08 20 b)(4) 

21 until when he left? 

20 

21 22 ~-~=-----------', 22 A Prior to the Bear Stearns merger A bJ(4l 

23 he was the spot gold and silver trader. 23 l(b)(4) 

24 0 For J.P. Morgan? 24 a fbJ(4) r 

25 A For J.P. Morgan, yes, in New 25 A fbJ(7)(C) foJ(4) 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 45 - 48 
Page 49 

1 Nowak 

(b)(4) 2 I 

(b)(7)q(b)(4) 3 

4 (b)(4) 1Kb)(7)( 1(b)(4) 

5 (b)(4) 

6 

l(b)(4) 7 0 I 

8 l(b)(4) i? 

9 A fb1(41 

~=~=~~~=~ 10 EXAMINATION BY MR. SMITH: 

11 Q (b)(4) ? 

12 A b)(4l 

13 (b)(4) 

14 EXAMINATION BY MS. RYALL: 

15 0 Kb)(4) I 

16 l(b)(4) 1 Mr. l(bJ(7J(CJI 

(b)(4) 17 ' b)(4) 18 A I 

(b)(4) 19 

20 

21 

22 

23 

l(b)(4) 24 0 

25 Mr. Kbl(7J(CJ I leaving infbl(7J(CJ I? 

Page 50 

1 Nowak 

2 A fb)(4) (b)(7)(C) I 

3 (b)(4) (b)(7)(C) 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 ~~)(fb)(4) (b)(7)(C) I 

(b)(4) (b)(7)(C) 17 

18 

19 

20 

21 

22 

23 

24 

25 

Page 51 

Nowak 

2 (b)(4) (b)(7)(C) 1 I 

3 (b)( ~'-'!\' 111(b)(4) (b)(7)(C) I 

b)(4) (b)(7)(C) 4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 l(b)(4) (b)(7)(C) I 

19 (b)(4) (b)(7)(C) 1~b)(7)(CJb)(4) (b)(7)(C) I 

20 b)(4) (b)(7)(C) 

21 (b)(4) (b)(7)(C) ~'-'!\' 11v1 fb)(4) (b)(7)(C) 

22 b)(4) (b)(7)(C) 

23 

24 

25 

Page 52 

1 Nowak 

2 b)(4) (b)(7)(C) 

3 

4 

5 

6 

7 

8 0 Was hel(bJ(4J (bJ(7J(CJ I? 

9 A KbJ(4) (b)(7)(C) 

10 0 Who did the spot trading go to, 

11 l(b)(7)(C) I? 

12 A No, it went toKbJ(7J(CJ I 

13 Keep in mind they were both in New York. 

14 EXAMINATION BY MR. SMITH: 

15 0 b)(4) (b)(7)(C) ? 

16 A b)(4) (b)(7)(C) 

17 b)(4) (b)(7)(C) 

18 

19 EXAMINATION BY MS. RYALL: 

b)(4) 20 0 

21 fb1(4) 

22 l(b)(4) I? 

23 A Kb)(4) 

~: rb)(4) 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 49 - 52 
Page 53 Page 55 

1 Nowak Nowak 

2~b")(4")-------------~ 2 you recall? 

3 3 A Knew who he was? 

4 4 0 Or were friendly with him. 

5 5 A fb1(7)(C) 1· 

6 6 0 Who is he? 

7 7 A He was a trader on the prop 

8~~-----------~ 8 desk. 

b)(4) 9 0 How would they communicate to 9 Q 

10 the others? 10 !(b)(4) =~--------~ 11 A bJ(4l 11 A fb1(41 

12 (b)(4) 12 Kb)(4) I 

13 13 Q b)(4) 

~----------~ 14 14 fb1(4) r. 

15 

(b)(4) 

15 A ~ 16 Q 16 Q fbJ(4) 

17 (b)(4) ? 17 A fb)(4) 

b)(4) 18 A 18 rb)(4) 

19 (b)(4) 19 

20 Q !(b1(41 l(bl(71(CI 20 

21 Q b)(4) p !{b)(4) ====:::=~I"'--~---~ 21 

l's !(bl(41 

22 A b)(4) I fb)(411 22 A 

b)(4) 23 MR. RAISLER: bl(41 23 Q I ? 

b)(4) 24 b)(4) 24 A b)(4) I 

(b)(4) Q b)(4) 25 

~----------~ 

? 25 I 

Page 54 Page 56 

1 Nowak 1 Nowak 

2 (b)(4) 2 l(b)(4) p. 

3 b)(4) ? 3 A KbJ(4) I 

4 Q (b)(4) 4 b)(4) 

5 !(b)(4) !? 5 

6 A fb)(4) 6 

7 (b)(4) Q b)(4) 7 I? 

b)(4) 8 8 A I 

9 9 b)(4) 

10 Q l(b)(4) I 10 

11 (b)(4l I? 11 

12 A fb1(41 I 12 

b)(4) 13 0 Was he at some other location 13 Q I? 

14 before the desk? 14 A b)(4) I 

15 A No. 15~ 

16 0 Do you recall what his 16 Q fbl(7J(CJ I, what is his role? 

17 background was before he came to J.P. 17 A He is the -- currently, now? 

18 Morgan? 18 0 Currently. 

19 A He was a!(b1(71(CI I 19 A Gold and silver spot trader. 

20 l(bJ(7J(CJ I for a number of years. I don't know 20 0 What about in 2008? 

21 how many. 21 A Just the gold spot trader. 

22 0 In precious metals? 22 Q I'm looking at Exhibit 2. You 

23 A In precious metals, yes. 23 have KbJ(7J(CJ I, fbJ(7J(CJ 1- l(bl(7l( I 

24 0 Did anybody that was currently 24 !:bJ(7J(Cl,fbJ(7J(CJ I what was his role? 

25 working there when he got hired know him, if 25 A He is a salesperson that covers 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 53 - 56 
Page 57 Page 59 

1 Nowak Nowak 

2 hedge funds. 2 A Platinum group metals, which is 

3 0 For metals? 3 platinum and palladium. 

4 A For metals. 4 0 Options? !(b)(7)(C) !, ~l(b~)(7~)(~C)--~p 5 Q 5 A !Oprons. 

6 A She is (?J\7 s assistant or 6 Q is :I(b:'.1(7'."l(:c1'.:'.:'.:'.::::I? 

7 junior. 7 A Yes. 

8 Q And l(bJ(?J(CJ r 8 0 On Exhibit 4? 

9 A He is my assistant, trading 9 A Yes. 

1 O assistant, junior. 10 0 What is his role currently? Is 

11 0 fbJ(?J(CJ I, we covered him. 11 he still there? 

12 (b)(?)(C) , b)(?)(C) ? 12 A Yes. He does, he does the PGM 

13 A bJ(?J(CJ , her andl(bl(7l(Cl, l(bl(7l( I is 13 spot for options. 

14 basically, he covers the mining, he is a 14 Q Did he do that in 2008? 

15 marketer that covers mining companies, and 15 A All except for the -- he and 

16 she is his junior. 16 l(bJ(?J(CJ r'orked together on the options part 

17 0 Junior trader? 17 of it. 

18 A No. Sales erson, marketer. 18 Q 

19 Q (b)(7)(C) , fbI(7)(C) I? 19 A bJ(?J(CJ , he just joined 

20 A Yes. 20 from (bJ(?J(CJ about a month ago. 

21 0 We talked about~Kb~l(7~I(~c~I __ __..., 21 0 So you mentioned what each of 

22 earlier. 22 the traders are actually trading. Do they 

23 A Yes. He was just a junior. 23 also have specific authorizations for what 

24 Q ForfbJ(?J(CJ P- 24 they are allowed to trade? 

25 A No, for me. 25 A fbI(4) I? 

Page 58 Page 60 

1 Nowak 1 Nowak 

b)(4) 2 Q In late '08? 2 Q 

3 A Yes. 3 A b)(4) 

b)(4) 4 Q You talked about!(bl(71(CI 1- 4 Q 

5 What about fbl(?J(CJ I? ~ls~th_a_t __ ~ 5 A 

6 !(b)(7)(C) I? 6 Q ~b)(4) I 

7 A !(bl(711 yes. 7 (b)(4) I! 

~b)(4) 8 O What is his role? 8 A I 

g (b)(4) 9 A He is the options trader in 

10 London. 10 Q b)(4) I? 

11 A '-b-)(4-1--1--------" 11 Q For which metals? 

12 A Just gold. 12 Q b)(4) I 

13 ~(b-)(4_)_~---------1-~ 13 Q And what about in 2008? 

14 A Same. 14 tb)(4) I? 

15 Q 15 

16 

A 

Q ~ r=b=)(4=)---------~ 16 A (b)(?)(C) He is the 

17 silver options trader. 17V6iiii 

18 0 What about in 2008? 18@i_f 

19 A ~b-)(4"I--------~ 19 A The same. 

20 Q And ~!(b-I(7=I(=cI~-~17 20 0 Are the traders allowed to trade 

21 A Also I should say in 2008 he was 21 for someone else? 

22 A ~b-)(4-1------~ 22 also --

23 0 :b)(?)(C) ? 23 Q b)(4) 

24 A (bJ(?J(CJ also did the PGM options. 24 (b)(4) 

25 Q PGM is what? 25 A Lb_)(4_) __ ,cl(_b)_(7_)(C_) __ ~f_b)_(4_)_~ 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 57 - 60 
Page 61 Page 63 

1 Nowak Nowak 

2 !(b)(4) ~--=""""----~P 3 Q ~ 4 A (b)(4) 

5 Q (b)(4) ? 

6 A (b)(4) 

7 Q (b)(4) A Kb)(4) I 

8 b)(4) ? (b)(4) 

9 A (b)(4) 

10 (b)(4) 10 l(b)(4) 1Kb)(7)(C 1(b)(4) I 

11 Q bJ(4l , are 11 (b)(4) 

12 there other limits that are placed on the 12 

13 

14 

traders trading? A ~(b~)(4"1~-------~ 13 

14 

15~ 15 

16 Q (b)(4) ? 16 

17 A b)(4) 17 Q b)(4) I? 

18 (b)(4) 18 A b)(4) I 

19 19 (b)(4) 

20 20 

21 Q (b)(4) 21 

22 (b)(4) ? 22 EXAMINATION BY MS. RYALL: 

23 A 23 Q What is that system? 

24 Q 

25 l(b)(4) 

fb)(4) 

' 24 

25 

A f~b-)(4_1 -------~ 

EXAMINATION BY MR. HAYECK: 

Page 62 Page 64 

1 Nowak 1 Nowak 

2 A (b)(4) I. 2 Q KbJ(4) 

3 Q b)(4) I? 3 tb)(4) 

4 A b)(4) I 4 l(b)(4) 

5 (b)(4) 5 A fbJ(4) 

6 6 Q fb)(4) 

7 7 A b)(4) I 

8 Q KbJ(4) I 8 Q b)(4) I 

9 (b)(4) I! 9 (b)(4) I! 

10 A !(b)(!_ 10 A b)(4) L 

11 EXAMINATION BY MR. HAYECK: 11 Q b)(4) I 

12 Q l(b)(4) 12 b)(4) 

13 !(b)(4) p 13 

14 A b)(4) 14 

15 (b)(4) b)(4) 15 p 

16 16=~A_:___._Kb~)(4~I _________ .._~ 

17 ~ ~ rb)(4) 

b)(4) 18 Q 

19 (b)(4) 19 EXAMINATION BY MS. RYALL 

20 (b)(4) 20 Q How soon after a trade or deal 

(b)(4) 21 A 21 is done do you actually put information into 

22 (b)(4) 22 l(b)(4) p 

23 Q b)(4) ? 23 A fbl(4I 

24 A b)(4) 24 b)(4) 

25 (b)(4) 25 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 61 - 64 
1 

Page 65 Page 67 

Nowak Nowak 

2 ~M4}~1(4-)------------~ 2 b)(4) 

3~ 3 ~-----------~ 4 Q b)(4) 4 A Sure, okay. 

5 l(b)(4) 5 EXAMINATION BY MR. SMITH: 

6 ?)(4) I? 6 Q fb)(4) 

7 A 7 !(b)(4) tb)(4 1 I? 

8 Q fbl(4) 8 A fb)(41 

9 j(tl(4l 1; rb)(4) 

10~? 

11 A rb)(4) 11 Q fb)(4) I 

12 l(b)(4) 12 fb1(4) r I 

(b)(4) 13 Q ~ 13 !(b)(4) r/ 

(b)(4) 14 A I 14 A l(b)(4) I 

15 Q (b)(4) I 15 EXAMINATION BY MS. RYALL: 

16 Did you used to use[bl(4l r 16 Q fb)(4) p 

17 A ~b)(4) I 17 A Kb)(4) I 

18 Q ,a(ba,)(4a,1 ~-----~r( 18 MR. SCHROEDER: We are talking 

19 A ~ 19 today, we are not talking 2008? 

20 Q 20 MS. RYALL: Yes. 

21 A 21 EXAMINATION BY MR. SMITH: 

22 !(b)(4) 22 Q b)(4) 

23 Q 23 l(b)(4) 

24 (b)(4) 24 i(b)(4) r 

251!iill±[J1 25 A fb1(4) 

Page 66 Page 68 

1 Nowak 1 Nowak 

b)(4) 2 A ; l(b)(4) 3 b)(4) 

(b)(4) 4 Q 

5 (b)(4) 5 EXAMINATION BY MS. RYALL: 

B (b)(4)? 6 0 Who keeps track of ~b~l(4"1 ---~ 

7 A 7 b)(4) ? 

8 Q (b)(41 ~ 8 A b)(4) 

9~? 9 (b)(4) 

10 A b)(4 10 ~-------------~ 11 Q b)(4) 11 0 How do ou o about doin that? 

12 (b)(4) 12 A b)(4) 

13 (b)(4) 13 (b)(4) 

14 (b)(4) 14 Q What is that called? 

15 A f{b)(4) 15 A fb)(4) 

16 Q j(b)(4) 16 fbl(4) 

17 !(b)(4) 17 [bJ(4) 

18 A 1151~14_1 -,----, 18 Q Tell me how that works. b 4 7 19 (b)(4) 19 0 How is that identified, by name 

20 b)(4) 20 or code or -- 21 A ~b~)(4") _______ __ 21 A fcfb")(40 

) ______ ~~? 

22 Q (bl(4) ~ 

~; l(b)(4) 23 b)(4) 

24 

25 Q l(b)(4) 

~---------- 25 ~-------------~ 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 65 - 68 
Page 69 Page 71 

1 Nowak Nowak 

2 !(b)(4) b)(4) 2 

3 i(b)(4) 

4 A r=------~ l(b)(4) 

3 

4 

5 !(b)(4) 5 

6 Q (b)(4) I 6 

7 (b)(4) I? 7 

8 A KbJ(4) I 8 

9 (b)(4) 9 Q fb1(4) 

10 10 (b)(4) f? 

11 11 A b)(4) I 

12 12 Q b)(4) I? 

13 Q ~b)(4) r? 13 A b)(4) I 

14 A fb)(4) I 14 Q b)(4) I 

15 

16 

(b)(4) 

Q 

I 

b)(4) I? ~ ~ ~b)(4) 

17 A (b)(4) I 17 b)(4) E 

18 (b)(4) 18 A [bl(4) 

19 19 (b)(4) 

20 20 Q b)(4) 

21 21 (b)(4) ? 

22 22 A (b)(4) 

23 23 Q b)(4) 

24 24 (b)(4) 

25 25 b)(4) ? 

Page 70 Page 72 

1 Nowak 1 Nowak 

2 (b)(4) 2 A KbJ(4) I 

3 3 b)(4) 

4 4 

5 5 

6 6 Q fb)(4) I 

7 7 KbJ(4) 1? 

8 

9 

8 A 

9 ~b)(4) 

fb)(4) 

I 

l!~,(7) lfb1(4) I 

10 10 Q b)(4) I? 

11 11 A b)(4) I 

12 12 Q b)(4) r 

13 13 A b)(4) I 

14 14 Q b)(4) I? 

15 15 A b)(7)(C) I, 

16 

17 

16 

17 

Q 

A 

b)(4) 

b)(4) I I? 

18 18 Q b)(4) I> 

19 19 A b)(4) I 

20 20 l.b)(4) 

21 

22 

23 

21 Q 

22 !(b)(4) 

23 A 

That makes sense. I? 

i(b)(4) I 

fbl(4J 

~---~ 

24 

25 

24 Q 

25 fb1(4) I? b)(4) 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 69 - 72 
Page 73 Page 75 

1 Nowak Nowak 

b)(4) 2 A b)(4) I 2 A I 

3 Q (b)(4) 3 Kbl(4) 

(b)(4) ? Q fb)(4) 4 4 

(b)(4) b)(4) 5 A 5 ? 

6 (b)(4) Kb)(4) I 6 A 

(b)(4) Q 7 7 fb)(4) 

Q (b)(4) (b)(4) 8 ? 8 r 

9 A (b)(4) 9 A Kbl(4) I 

10 (b)(4) I 10 b)(4) 

11 (b)(7)(C) (b)(4) I 11 

(b)(4) 12 I 12 

(b)(7)(C) (b)(4) Q b)(4) 13 I 13 ? 

(b)(4) b)(4) 14 I 14 A 

(b)(4) 15 Q fb)(7)(C) I 15 Q b)(4) 

(b)(4) 16 I l(bJ(7J(CJ I ' c1s!(;,,blc-('~I -------.-'I? 16 

17 A fbI(4) 17 i(b)(4) I? 

18 Q'c f'be,)(" 41------'-----~I 18 A Kb)(4) I 

19 19 b)(4) (b)(4) I 

20 (b)(4) I? 20 

21 A fbI(4I 21 I 

22 (b)(4) 22 

23 23 

24 24 

25~-------------- 25 

Page 74 Page 76 

1 Nowak 1 Nowak 

2 (b)(4) 2 Q So Mr.l(bJ(7J(CJ I, (b)(4) 

3 3 (b)(4) 

4 4 (b)(4) ? 

b)(4) 5 5 A 

6 6 Q b)(4) 

7 b)(4) 7 

l(b)(4) b)(4) 8 Q 8 A I 

9 (b)(4) I 9 Q ~b)(4) I f 1 Q (b)(4) ~ 10 A b)(4) 

11 A ~l\~),(7lll(b)(4) I 11 Q And KbJ(7J(CJ I, !(b)(4) 

12 !(b)(4I 12 llilli (b)(7)(C) 13 Q 13 (b)(4 ? 

14 A (b)(4) 14 A b)(4) 

15 0 (b)(4) ? 15 (b)(4) 

16 A b)(4) 16 

17~ 17 

18 Q l(b)(4) 18 

19 !(b)(4) I? 19 

20 A (b)(4) 20 Q b)(4) 

b)(4) 21 (b)(4) ? 21 0 

22 (b)(4) 22 A ~-~ 

b)(4) 

23 (b)(4) ? 23 EXAMINATION BY MR. SMITH: 

24 A ~--~ 

(b)(7)(C) 24 Q b)(4) 

25 0 What was he authorized to do? 25 (b)(4) 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 73 - 76 
Page 77 Page 79 

1 Nowak Nowak 

2 (b)(4) ? ~ rb)(4) 3 A (b)(4) 

4 Q ~b=)(4~)----~~---~ 

5 (b)(4) ? 5 Q Who determines that? 

6 A b)(4) fb)(4) 6 A I 

7 (b)(4) 7 r)(4) 

8 I 8~---~--~-----~ b)(4) 9 EXAMINATION BY MS. RYALL: 9 Q I? 

1 Q Q (b)(4) b)(4) I 10 A 

11 (b)(4) 11 Q b)(4) 

12 (b)(4) 12 fb)(4) ' 13 A b)(4) 13 A ~b)(4) 

14 r)(4) ~~ l(b)(4) 15 I 

16 Q i(b)(4) 16 Q fb)(4) I 

17 (b)(4) 17 ~b)(4) 1? 

18 (b)(4) fb)(4) ? 18 A I 

19 A b)(4) 19 l(b)(4) I 20 Q ~(b~)("4)-----~~- 20 (b)(4) I 

21 A l~(b+)(4+1_. ____ ~ 21 Q fb)(4) 

22 0 !(b)(4) p 22 l(b)(4) 

23 A (b)(4) 23 fb)(4) r 

24 (b)(4) 24 A fb1(41 

25 a "rb~)("'l-~I?~---~ 25 ~------------- ~-~ 

Page 78 Page BO 

1 Nowak 1 Nowak 

b)(4) 2 Q How often do you do that? 2 A I? 

(b)(4) Q b)(4) I 3 A 3 I 

b)(4) 4 (b)(4) 4 A I 

5 5 l(b)(4) I 

6 6 Q b)(4) 

7 fb1(4) 7 r 

b)(4) 8 8 A 

9 9 fb1(4) I 

10 10 EXAMINATION BY MR. HAYECK: 

11 11 0 J(bl(41 I 

12 12 (b)(4) 

13 13 I 

(b)(4) 14 14 t? 

(b)(4) 15 15 A I 

b)(4) 16 16 ~~~=--------~-_. 17 Q fb)(4) 17 I 

18 (b)(4) I 18 

19 (b)(4) t? 19 

20 A b)(4) I 20 

b)(4) 21 Q I? 21 

22 A KbJ(4) 22 

~: l(b)(4) 23 

24 

25 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 77 - 80 
Page 81 

1 ~----~N~o~w~a~k~-----~ 2 (b)(4) 

3 fb)(4) I 

4 Q In 2008 and 2009 (bJ(4l ? 

b)(4) 5 A 

6 (b)(4) 

7 

8~----~--~-----~ 

9 EXAMINATION BY MS. RYALL: 

10 Q (b)(4) 

11 ~(b~)("4)~~---~-------_J 

12 A b)(4l 

13 Q ',,(b~)(~4)~---------

14 (b)(4) 

15 A b)(4) 

16 (b)(4) 

17 

18 

19 

20 c__~--.,,,a:;--------.-~--__J 1 21 Q .cb_l(_' ~~--~~~J' does 

22 that go by metal or products? 

23 A fb1(41 

24 (b)(4) 

25~--------------~ 

Page 82 

1 Nowak 2~(b~)("4)---~~~~------~ 

3~~-=~~~-~-~--c' 

4 Q What about spot versus forwards? 

5 A ;(b)(4) I 

6!b)(4) -

7 Q b)(4) I 

B f(bl(41 I do you generally do the hiring of the 

9 traders? 

10 A K"b-1(-41-------~I 

11 l(b)(4) I 

12 13 ~--=-----~----~ Q b)(4) I? 

"b-)(-4)-----~~ 14 

15 

A 

Q b)(4) r 

16 A ,~"'' l(b)(7J(CJ I. 

17 Q Who was It in 2008? 

18 A (b)(7)(C) 

19 Q In 2008 bJ(7J(CJ was on the 

20 client side? 

21 A He was in charge of the global 

22 prop team, and he was in charge of the 

23 global metals team. 

24 Q Was there a reason that~ 

25 f{b)(4) f? 

Page 83 

Nowak 

2 A What do you mean? 

3 Q Now he is still in charge of 

4 global prop, and you're in charge of global 

5 metals, correct? 

6 A I am in charge of global 

7 precious metals trading, so global metals is 

8 a lot of other parts to it. 

9 Q So he is still in charge of 

1 O other metals? 

11 A No, he is just in charge of 

12 proprietary trading right now. 

13 Q Who decides or determines the 

14 traders' com ensation? 

15 A b)(4) 

16 (b)(4) 

17 Q That's got two components to it, 

18 their yearl salar and then a bonus? 

19 A b)(4) 

~----'-, 20 Q b)(4) ? 

21 A fb1(4) I 

22 Q Who determinesl(bJ(4l I 

2234 :(b)(4AI f? ~--~ . fb1(4) I 

(b)(4) 

Page 84 

1 Nowak 

b)(4) 2 

b)(4) 3 Q 

(b)(4) 4 

b)(4) 5 

6 Q What goes into the determination 

7 of l(b)(4) I! 

8 A fb)(41 I 

9 b)(4) 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 Q What's the biggest component in 

20 that determination? 

A b)(4) 21 

22 b)(4) 

Q b)(4) 23 

24 Lb~)(4~)--,;c=--,-~7 A b)(4) 25 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 81 - 84 
Page 85 Page 87 

1 Nowak Nowak 

2 a !(b)(4) 2 A b)(7)(C) I_ 

3~ bJ(4J (bJ(11(c1 I? 3 0 

4 A ~b~)(4c)~(b~)(7m)(~C)--------,lc-----' 4@8±0? 

5 A 5 (b)(4) (b)(7)(C) 

(b)(4) 6 a 6 l(b)(4) (b)(7)(C) I I 

7 (b)(4) 17 7 a fbl('I (b)(7)(c1 I 

~---------~ ~b)(4) 8 A I 8fb)('il? g (b)(4) 9 A i5R4il 

10 10 a b)(4) (b)(7)(C) (? 

11 11 A b)(4) (b)(6) (b)(7)(C) I 

12 12 Kb)(6) (b)(7)(C) L l(b)(4) (b)(6) (b)(7)(C) I 

13 13 KbJ(6) b)(4) - I 

b)(4) (b)(7)(C) 

15L_~o-="'---.~=----,-..J 14 14 a r 

1(b)(4) I? fb)(4) 15 A b)(7)(C) I '- 16 !(b)(4) 16 a b)(4) (b)(7)(C) r 17 

17 A ~b)(4) 17 A b)(6) Jb)(4) (b)(7)(C) I I 

18 (b)(4) 18 a ~b)(4) (b)(7)(C) I 

19 19 (b)(4) (b)(7)(C) I 

20 20 (b)(4) (b)(7)(C) r. 

~b)(4) (b)(7)(C) 21 21 A I 

22 22 j{b)(4) 17 

23 23 a fb1(,11 

24 A ~rb~)(4~)~(b~)(7~)( 24 7C)------, 

25 25 fbJ(4) (b)(7)(C) 

Page 86 Page 88 

1 Nowak 1 Nowak 

2 ~(b~)(4")-------------~ 2 Q b)(4) (b)(7)(C) 

3 (b)(4) (b)(7)(C) ? 3 

4 A b)(4) b)(7)( (b)(4) (b)(7)(C) 4 

5 5 b)(4) (b)(7)(C) (b)(7)( 

6 (b)(4) (b)(7)(C) 6 

7 7 (b)(4) (b)(7)(C) 

8 8 Q Does Mr. l(bJ(7J(CJ I consistently 

9~--------------~ 9 produce the higher profits? 

10 0 Did the traders ever consult 10 A fb1(41 

11 with you about (bJ(4l ~ ~ rb)(4) 12 ~ ~--------~ 

13 A b)(4) 13 0 I'm not sure how to phrase this, 

14 (b)(4) 14 but how does his amount of profits compare 

15 15 to the other traders in the group? 

16 a l(b)(4) 16 A l(b)(4) 

17 l(b)(4) 17 ii l(b)('I 18 A ~b)(4) I? 

19 a (b)(4) 

20 !(b)(4) 20 Q fb)(4) 

=======;-;:-------17 

21 (b)(4) 7 21 (b)(4) 

b)(4) 22 A 22 -~---------~-~ 23 (b)(4) 23 (b)(4) 

24 24 A b)(4) 

(b)(4) 25 a 25 (b)(4) 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 85 - 88 
Page 89 Page 91 

1 Nowak Nowak 

2 Q l'i,,(b;;,)(4.;,) ~---~I'' 2 record. I think Gene had a question to 

3 A !(b)(4I! 3 ask. 

4 Q b)(4) e 4 EXAMINATION BY MR. SMITH: 

(b)(4) 5 Q b)(4) 5 A I 

(b)(4) 6 Q I? 6 (b)(4) 

(b)(4) 7 (b)(4) b)(7)(C) 7 A 

8 (b)(4) I 8 (bl(4l What part 

(b)(4) 9 Q I 9 of the business did those other products fit 

10 l(b)(4) ,, 1 O into or that tradinq fit into? 

b)(4) 11 A I 11 A fbI(4I I 

(b)(4) (b)(7)(C) 12 b)(4) 12 Q I 

l(b)(4) (b)(7)(C) 13 I 13 14~~Q~"f,b:;;)(4

") _______ i~-~ (b)(4) (b)(7)(C) 14 I? 

15 A )~l)~U 15 fb)(4) [? 

16 Q l(b)(4) (b)(7)(C) 16 A ~b)(4) 

b)(4) 17 I!~!!~! c I? 17 

18 A b)(4) (b)(7)(C) 18 

19 Q ~(b"l("4)-,(b"l(""71""(C\-)-----r?::-_~ 19 

20 A l(b)(4) (b)(7)(C) 20 

21 l(b)(4) (b)(7)(C) 21 

22 l(b)(4) (b)(7)(C) 22 MR. RAISLER: fbI(4I I 

23 Q b)(4) (b)(7)(C) 23 

24 (b)(4) (b)(7)(C) ? 24 

25 A ~l(b~)(4~)~(b~)(7~)(~C~) -----~ 25 THE WITNESS: [(bl(4I 

~---~ Page 90 Page 92 

1 Nowak 1 Nowak 

2 ~(b=)(4~) ~(b=)(7=)(=cI------------~ 2 (b)(4) 

3 3 

4 4 

5 5 

6 6 

7 7 EXAMINATION BY MS. RYALL: 

8 8 Q b)(4) I? 

9 'r,;(b:;;,l(""" 1~rb),,(7,,)(c"i--==ec:b)"'(4.,.) ;;:(b,,.)(7,,,)(c""i-----,--~ l 9 A b)(4) I 

1 Q (b)(4) (b)(7)(C) 10 Q b)(4) I 

11 Q [(b)(4) (b)(7)(C) I 11 (b)(4) If 

12 (b)(4) (b)(7)(C) i? 12 A ~b)(4) I 

13 A fb)(4) (b)(7)(C) I 

~; ib)(4) I 14 (b)(4) (b)(7)(C) I 

15 ~~Q,---f~lb")(4~)---------,----I~ 15 Q fb)(4) (b)(7)(C) I 

16 (b)(4) (b)(7)(C) P, 16 fb)(4) I? 

17 A !~!!~!c, I 17 A b)(4) I 

18 MR. RAISLER: Would this be a 18 Q b)(4I I 

19 good time to take a short break? 19~ 

20 MS. RYALL: Yes. Go off the 20 A fbI(4) 

21 record for a break. 21 Q ""1_w_a_n.,..t 1·0 talk a little bit 

22 (Whereupon, a recess was taken.) 22 about training and compliance now. 

23 (Whereupon, Armand Nakkab left 23 A Okay. 

24 the deposition.) 24 0 Training, what kind of training 

25 MS. RY ALL: Let's go back on the 25 did the traders go through if at all on a 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 89 - 92 
1 

Page 93 Page 95 

Nowak Nowak 

2 b)(4) regular basis? 2 

b)(4) 3 A 3 I 

b)(4) 4 !(b)(4) 4 I 

5 Q l(b)(4) I? 5 A (b)(4) I 

6 A fb)(4) 6 Q fb)(4) I 

7 (b)(4) 7 Kb)(4) I? 

b)(4) I 8 8 A 

(b)(4) b)(4) 9 Q 9 Q I 

1 Q (b)(4) 1 Q Kb)(4) 

(b)(4) 11 !{b)(4) I? 11 A I 

12 A fbJ(4) 12 ~b)(4) I 

fb)(4) ~! 13 Q I l(b)(4) 

I 

14 fb)(4) I ~~r f~b")(4")---------~ 15 Q fb)(4) I 15 A 

16 rb)(4) ~ ~ rb)(4) 17 (b)(4) I? 

18 A l(b)(4) I 18 Q b)(4) 

19 l(b)(4) 19 b)(4) I 

20 Q i(b)(4) 20 A b)(4) r 

21 A b)(4) 21 (b)(4) 

22 s ere any kind of manual or 

~!l(b)(4) 23 compliance uide for traders specifically? 

24 A (bl(4l 

-~==~ 25 MS. RY ALL: Actually, I want to 

Page 94 Page 96 

1 Nowak 1 Nowak 

(b)(4) 2 2 ask you about an exhibit. We will mark 

3 3 this as 5. 

4 4 (Three-page document was marked 

fb)(4) 5 Q 5 as Commission's Exhibit 5 for I 

,., 6 (b)(4) 6 identification, as of this date.) 

fb)(4) 7 A I 7 Q I am handling you what's been 

8 (b)(fb)(4) I 8 marked as Exhibit 5. It is three pages. 

(b)(4) 9 9 The first page is Bates marked with Bates 

10 10 number JPM-AG-CORP 00000005, and the 

11 11 subsequent pages are 6 and 7, if you can 

12 12 just take a couple of minutes to read 

13 13 through those. 

14 14 A This final thing, what is this? 

l(b)(4) 15 Q I 15 Q That's handwritten notes that 

16 {b)(4) lf,\;'~b)(4) I? 16 came to us in a production with the prior " 17 A ~b)(4) I 17 two pages. I take it this is not your 

(b)(4) 18 I 18 handwriting. 

19 (b)(4) II~~)( fb)(4) I 19 A No. Okay. 

20 (b)(4) I( 20 Q So the first e-mail has no "to" 

l(b)(4) 21 Q I 21 or "from" on it, but the second page, number 

22 l(b)(4) I? 22 six, has from Michael Nowak, you, to 

23 A b)(4) 23 bl(71(CI fb1(71(CI I. and ~l(b~l(7~1(~CI~' 

24 (b)(4) 24 b)(7)(C 

25 Q ~--------J (b)(4) 25 A Yes. 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 93 - 96 
Page 97 Page 99 

1 Nowak Nowak 

1(b)( Kb)(4) (b)(?)(C) 2 0 And you have read through these 2 Kb)(4) (b)(?)(C) 

Kb)(4) (b)(?)(C) 3 three pages. Do you recall the 3 

{b)(4) (b)(?)(C) 4 circumstances bJ(4l (bJ(?J(CJ 4 I 

5 fb)(4) (b)(?)(C) (b)(4) (b)(?)(C) ? 5 Q 

6 A I recall this one, the middle 6 (b)(4) (b)(?)(C) I? 

fb)(4) (b)(?)(C) 7 sheet. 7 A I 

8 0 ThP nnP frnm ""' ? 8 Kb)(4) (b)(?)(C) I 

9 A fb)(4) (b)(?)(C) I 9 Q Kb)(4) (b)(?)(C) 

1 Q b)(4) (b)(?)(C) l(b)(4) (b)(?)(C) 10 I 

b)(4) (b)(?)(C) 11 11 

12 12 

13 13 

14 14 

15 15 

16 16 

17 17 

18 18 

19 19 

b)(4) (b)(?)(C) l(b)(?)(C) (b)(4) (b)(?)(C) 20 20 I 

b)(4) (b)(?)(C) 21 21 

22 22 

23 23 ~b~)(4")"(b~)(~7)~(C") ________ l~<(b~)(~7)~(C~)71--~ 24 24 

25 (b)(?)(C) l(b)(4) (b)(?)(C) I 25 b)(4) (b)(?)(C) . This 

Page 98 Page 100 

1 Nowak 1 Nowak 

2 

3 

(b)(4) (b)(?)(C) 

\~/\!/,,-., l(b)(?)(C) KbJ(4) (b)(?)(C) 

2 

3 

is definitely not my handwriting. 

Q The last page is the handwritten 

4 

5 

(b)(4) (b)(?)(C) 4 

5 

notes marked with Bates 7~ at the top it 

says, bJ(?J(CJ on \?)\7 ~" 

6 

7 b11?11C ~b)(4) (b)(?)(C) 

6 

7 

A 

Q 

b)(4) 

~-Sb)*(4~)('b)~(7~)(7C)~-----~ 

8 (b)(3) 7 USC §12 (CEA) (b)(4) (b)(?)(C) 8 fb1(4) ~ P 

9 9 A 

10 10 Q 

11 

12 

13 13 A Kb)(4) (b)(?)(C) 

14 Kb)(4) (b)(?)(C) 14 (b)(4) (b)(?)(C) 

15 Q (b)(4) (b)(?)(C) ? Kb)(4) (b)(?)(C) 15 I 

16 A (b)(4) (b)(?)(C) 16 (b)(4) (b)(?)(C) 11~~;~1t~/\!L0, I 

17 Q tb)(4) (b)(?)(C) I 17 Q fb)(4) (b)(?)(C) I 

18 l(b)(4) (b)(?)(C) 18 b)(4) (b)(?)(C) 

19 A Yes. 19 

20 

21 

Q And it sa 

(b)(4) (b)(?)(C) 

s, bJ(4J (bJ(?J(CJ 20 

21 A b)(4) 

h1/71W.1 

I 

22 (b)(4) (b)(?)(C) 22 Q b)(4) (b)(?)(C) fb)(? 

23 A b)(4) (b)(?)(C) 23 fb)(4) (b)(?)(C) 

24 (b)(4) (b)(?)(C) 24 (b)(4) (b)(?)(C) " 25 (b)(4) (b)(?)(C) (b)(?)(C) (b)(4) (b)(?)(C) 25 A rb)(4) (b)(?)(C) 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 97 - 1 00 
Page 101 

1 Nowak 

2 (b)(4) (b)(7)(C) 

3 

4 

5 

6 

7 

8 

9 10~-Q--~jl(~b)"(4')(~b)~(7")(C_) ______ ,I_~ 

11 ''Kb)(~b)(4) (b)(7)(C) 

12 (b)(4) (b)(7)(C) 

13 (b)(7)(C) ." 

14 ~b")(4")"(b"')(7-)(~C') ----, 

15 (b)(4) (b)(7)(C) 

16 (b)(4) (b)(7)(C) ? 

17 A b)(4) (b)(7)(C) 

18 (b)(4) (b)(7)(C) 

19 Q b)(4) (b)(7)(C) 

20 (b)(4) (b)(7)(C) (b)(7)(C , 

21 (b)(4) (b)(7)(C) ? 

22 A b)(4) 

23 Q ~(~b)(~4)-(-b)~(7)+(C_) ______ _ 

24 (b)(4) (b)(7)(C) 

25 A b)(4) (b)(7)(C) 

Page 102 

1 Nowak 

2 (b)(4) (b)(7)(C) 

3 

4~-~======~===~~ 5 Q l(b)(3) 7 USC §12 (CEA) (b)(4) (b)(7)(C) I 

~ (b)(3) 7 USC §12 (CEA) (b)(4) (b)(7)(C) I 

8 Do you know what that's 

9 referring to? 

10 A ~b")(4")"(b"')(7-)(~C') ----, 

11 (b)(4) (b)(7)(C) 

12 Q (b)(3)7 ? 

13 A (b)(4l 

14 Q 'l,:(b"')("4)"'(b"')(~7)~(C')---~ 

~ ~ rb)(4) (b)(7)(C) 

17 !(b)(4). f' 

18 A l(b)(4) (b)(7)(C) 

~~ rb)(4) (b)(7)(C) 

21 6 l(b)(4) (b)(7)(C) 

22 (b)(4) (b)(7)(C) 

23iess'SSSsasaa=a-------=a;;==-~ 24 (b)(4) (b)(7)(C) ~}(7)( ~" 

25 Do you know who that is referring to? 

Page 103 

Nowak 

2 A Kb)(4) (b)(7)(C) I 

3 fb)(4) (b)(7)(C) f_b)(7)( I. 

4 Q ~b)(4) (b)(7)(C) I 

5 b)(4) (b)(7)(C) 

6 

7 

8 

9 

Do you recall what this Is 

12 referring to? 

10 11 ~------------~ 

13 A ~rb-)(4")"(b")(7-)(=c1~-----

~ ~ rb)(4) (b)(7)(C) 

16 Q fb1(4) (b)(7)(C) 

17 b)(4) (b)(7)(C) 

18 

19 

20 

21 

22 

23 

24 bcc;c-,cem,;,,,-----------,,===-,--, 25 l(b)(4) (b)(7)(C) fb)(7)(CI)~])~], I 

Page 104 

1 Nowak 

2 b)(4) (b)(7)(C) 

3 

4 

(b)(7)(C) b)(4) b)(7)(Cr 5 bl(7)/Cl 1 . 

6 A b)(4) 

ck,n,c 

7 Q b)(4) (b)(7)(C) I 

8 (b)(4) (b)(7)(C) I! 

9 A b)(4) 1 Kb)(4) I h\f7\fr\ 

10 Q ~'-'II 11 l(b)(4) i? 

11 A b)(4) I 

12 Q fbJ(4) ,~, l(b)(7)( rb)(4) (b)(7)(C) 

13 (b)(4) 

14 A b)(4) (b)(7)(C) 

15 (b)(4) (b)(7)(C) 

16 Q (b)(4) (b)(7)(C) 7 

17 A b)(4 

18 Q rcb-)(4"")"(b")(7-)(=C)~------~ 

19 !(b)(4) . f' 

20 A ~rb-)(4")~(b")(7-)(=c1~----~ 

21 (b)(4) (b)(7)(C) 

22 

23 ~(b")(r."'(b")(4")""(b")("(b")(°'4)'(b")("'71"(C")-----,--~ 

24 (b)(4) (b)(7)(C) 

25 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 101 -104 
Page 105 Page 107 

1 Nowak Nowak 

2 l(b)(4) (b)(7)(C) 2 b)(4) (b)(7)(C) 

l(b)(4) (b)(7)(C) 3 IKb)(11(b)(4) (b)(7)(C) 3 

()(4) (b)(7)(C) 4 4 

5 

6 l(b)(4) (b)(7)(C) I (b)(7)(Cfb)(4) (b)(7)(C) I 

5 

6 

7 l(b)(4) (b)(7)(C) 7 

8 8 Q fb)(4) (b)(7)(C) ~ 

9 

10 Q {b)(4) (b)(7)(C) I 

{b)(4) (b)(7)(C) 9 A 

10 (b)(4) (b)(7)(C) 

I 

11 l(b)(7)(Cfb)(4) (b)(7)(C) 1? 11 

12 A (b)(4) ( 

13 Q (b)(4) (b)(7)(C) ii l(b)(4) (b)(7)(C) 

I 

12 

13 

14 

15 Q fb)(4) (b)(7)(C) I 

16 Kb)(4) (b)(7)(C) 

17 EXAMINATION BY MR. HAYECK: 17 fb)(4) (b)(7)(C) I? 

18 Q (b)(4) ~}(7)( 'S b)(4) 18 A b)(4) I 

19 A b)(4l (b)(7 b)(4) 19 Q b)(4) (b)(7)(C) r 

20 (b)(4) 20 A b)(4) (b)(7)(C) I 

21 Q ~b)(7)(C) 21 Q b)(4) (b)(7)(C) I 

22 A )(4) 22 (b)(4) (b)(7)(C) I' 

23 (b)(4) 23 A Kb)(4) (b)(7)(C) I 

~: r)(4) (b)(7)(C) 24 ~-----------~ 

25 EXAMINATION BY MS. RYALL: 

Page 106 Page 108 

1 Nowak 1 Nowak 

2 Q l(b)(4) (b)(7)(C) 2 Q b)(4) (b)(7)(C) 

3 !(b)(4) _ 3 b)(4) (b)(7)(C) 17 

4 A b)(4) 4 A b)(4) (b)(7)(C) 

(b)(4) (b)(7)(C) 5 Q 5 b)(4) (b)(7)(C) 

6 (b)(4) (b)(7)(C) 6 EXAMINATION BY MR HAYECK· 

7 (b)(4) (b)(7)(C) 7 7 Q b)(4) (b)(7)(C) r 

8 A b)(4) (b)(7)(C) 8 A b)(4) (b)(7)(C) I 

9 l(b)(4) (b)(7)(C) 9 Q b)(4) (b)(7)(C) I 

10 10 (b)(4) (b)(7)(C) 

b)(4) (b)(7)(C) 11 Q 17 11 

12 A (b)(4) (b)(7)(C) I 12 

b)(4) (b)(7)(C) {b)(4) (b)(7)(C) 13 Q I 13 r 

14 (b)(4) (b)(7)(C) 14 A ~b)(4) (b)(7)(C) I 

15 15 b)(4) (b)(7)(C) 

16 16 

17 17 

18 18 

l(b)(4) (b)(7)(C) 19 I 19 Q ~b)(4) (b)(7)(C) I 

20 (b)(4) (b)(7)(C) l'-'1(7)(C) I 20 Kb)(4) (b)(7)(C) 

(b)(4) (b)(7)(C) ~b)(4) (b)(7)(C) " 21 17 21 A I 

22 A b)(4) I h\f7\f 22 fb1(4) . I 

23 Q (b)(4) (b)(7)(C) I 23 Q fbJ(4) (b)(7)(C) 

24 (b)(4) (b)(7)(C) I 24 (b)(4) (b)(7)(C) ? 

fb)(4) (b)(7)(C) 25 A b)(4) (b)(7)(C) 25 A I ~---------J 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 105-108 
Page 109 Page 111 

1 Nowak Nowak 

2 (b)(4) (b)(7)(C) 2 EXAMINATION BY MR. SMITH: 

3 3 Q rb)(4) (b)(7)(C) 

4 4 b)(4) (b)(7)(C) 

5 5 

6 6 

(b)(4) (b)(7)(C) 7 7 I P. 

f~l(4l KbJ(7)(C) fb)(4) (b)(7)(C) 8 8 A I 

IKb)( 1(b)(4) (b)(7)(C) 

10 10 (b)(4) (b)(7)(C) 

9 9 ~b)(4) 

I 

11 11 (b)(4) (b)(7)(C) L~)( l(b)(4) (b)(7J(CJ I 

12 Q (b)(4) (b)(7)(C) I 12 b)(4) (b)(7)(C) 

13 (b)(4) ? 13 

lb)(4) (b)(7)(C) 14 A I 14 

15 (b)(4) (b)(7)(C) 15 EXAMINATION BY MS. RYALL: 

16 16 Q !?IU is !(bll711CI I? 

17 17 A Sorry, bJ(7J(CJ 

18 18 Q b)(4) (b)(7)(C) 

19 19 ,~1\!L b)(7)(C) b)(4) (b)(7)(C) 

20 20 (b)(4) (b)(7)(C) 

21 21 b)(4) 

22 22 

23 23 b)(4) (b)(7)(C) 

24 Q (b)(4) (b)(7)(C) I 24 L---cc===--------,c--' b)(4) (b)(7)(C) 25 I(b)(4) (b)(7)(C) ,? 25 Q 

Page 110 Page112 

1 Nowak 1 Nowak 

2 A Yes. 2 b)(4) (b)(7)(C) 

3 EXAMINATION BY MS. RYALL: 3 l(b)(4) (b)(7)(C) R 

4 Q (b)(4) (b)(7)(C) 4 A fbJ(4) (b)(7)(C) 

5 (b)(4) (b)(7)(C) b)(4) (b)(7)(C) 5 b)(4) (b)(7)(C) 

? 6 

r)(4) (b)(7)(C) 7 

8 !(b)(4) 8 

9 Q (b)(4) (b)(7)(C) 9 

1 Q (b)(4) (b)(7)(C) b)(7)( ? . . 10 

11 A b)(4) 11 Q fb)(4) (b)(7)(C) I 

12 Q ~fb#)(4e")Sc(b~)(7~)(~C') -----~ 12 ~b)(4) (b)(7)(C) I° 

13 l(b)(4) (b)(7)(C) 1? 13 A Kb)(4) (b)(7)(C) I 

14 A fb)(4) (b)(7)(C) 14 (b)(4) (b)(7)(C) I 

15 (b)(4) (b)(7)(C) 15 

16 16 

17 17 

b)(4) (b)(7)(C) 18 18 Q I? 

19 19 A b)(4) (b)(7)(C) I 

l(b)(4) (b)(7)(C) 20 Q I 20 EXAMINATION BY MR. SMITH: 

(b)(4) (b)(7)(C) 21 Q b)(7)(C) b)(4) (b)(7)(C) 21 17 

22 A Kb)(4) (b)(7)(C) I 22 b)(4) (b)(7)(C) 

23 23 A b)(4) (b)(4) (b)(7)(C) 

24 Q ,Jab .. )(4a,) "-(b-)(7-)(~C)----~ 24 

25 25 (b)(4) (b)(7)(C) ? 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 109- 112 
Page 113 

1 Nowak 

2 A fbl(4) (b)(7)(C) I 

3 (b)(4) (b)(7)(C) 

4 

5 

6 

7 

8 

9 

10 

11 

12~E~X~A~M~IN~A~T=l~O~N~B~Y~M=s-. R=Y~A~L~L-,---~ 

13 Q (b)(4) 

~~ l(b)(4) 

16 l(b)(4) 

17 A b)(4) I 

18 (b)(4) (b)(7)(C) (b)(4) fb)(7)(C) I, 

19 (b)(4) 

20 

21 

22 

23 0 b)(4) [? 

24 A b)(4) I 

25 (b)(4) I 

Page114 

1 Nowak 

~ l(b)(4) 

5 Q j{b)(4) 

6 (b)(4) I 

(b)(4) 7 ? 

8 A fb)(4) I 

9 (b)(4) 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

fb)(4) 21 0 I 

22 (b)(4) I? 

23 A b)(4) I 

24 (b)(4) 0 I' 

25 A b)(4) I 

Page115 

Nowak 

2KbJ(4) I 

3 Kb)(4) I 

4 0 fb)(4) r 

5 A (b)(4) 1 I 

6 (b)(4) 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 0 ~b)(4) I 

21~ 

22 A fb1(4) 

23 0 1b)(4) 

24 Kb1(4) ~ 25 A ~)(4) 

Page116 

Nowak 

2 (b)(4) 

3 0 

5 

4 !(b)(4) 

A ~ ~ 6 MR. RAISLER. cKb~)(4~) ---~ 

7 

8 ~ MS. RYALL: fb1(41 

9 !(b)(4) I 

10 EXAMINATION BY MR. SMITH: 

11 =,;.Q:.._--=b)=(4=)=;;;--------~ 

12 Kb1(4) I? 

13 A fbl(41 

14 b)(4) 

15 EXAMINATION BY MS. RYALL: 

16 Q Do you have any professional 

17 licenses, like a Series 7 or Series 3? 

18 A I don't, no. 

19 Q Now I want to start getting into 

20 the tough part, just the trading strategies. 

21 A Okay. 

22 Q And I guess my first question is 

23 is there an overall trading strategy for the 

24 whole group, or is it broken down by 

25 portfolio or by trader? 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 113-116 
Page 117 Page119 

1 Nowak 

2 ="A-'----_.f_'bl_(41 _________ L.,1 

3 (b)(4) 

4 

5 

6 

7 

8~------------~ 

9 Q Does each portfolio have a 

10 specific strategy that's done in that 

11 portfolio? 12 A ~fb")(4"1---------~ 

13 l(b)(4) I 

14 Q Who is involved in determining 

15 the strategies that the traders can use? 

16 A Kb)(4) 

17 (b)(4) 

18 

19 

20 

21 ~~Q~~D-o~t'he_y_h_a_v_e~t-o_c_o_m_e~to_y_ou-a-nd-,----' 

22 say, "I'm going to do this? Is it okay?" 

I ;~ l(b)(4): [b)(4) 

25 Q rb)(4) 

~----------~ Page11B 

1=~-~ Nowak 

2fb)(4I I? 

3 A fb)(4I I 

4 (b)(4) 

5 

6 

7 

8 

9 

10'---~U~7 f'~b)~(4'1--------,I-----' 

11 l(b)(4) I 

12 !(b)(4) I? 

13 A fb1(411 

14 0 So for silver, can you describe 

15 for me what strategies are generally used 

16 for silver among the traders? 

17 A Kb)(4) I 

18 (b)(4) I 

19 (b)(4) l(b)(7)(C)fbl(4) I 

20 (b)(4) 

21 

22 

23 

24 

25 

Nowak 

2 fbJ(4) 

fb)(4) 3 Q 

4 !(b)(4) I? 

5 A Spot trade, yes. 

MR RAISLER·rl(b-)(4_)_7 6 

7 (b)(4) 

8 

9 

to 

t t 

12 

13 

14 MS. RYALL: ,(bl(4I I 

(b)(4) 15 

16 

17 

18 

19 

20 MR. RAISLER:~ 

THE WITNESS:'"100(~bl(~41~---, 21 

22 !(b)(4) !? 

23 MS. RYALL: l(b)(4) 

24 (b)(4) 

25 

Page 120 

1 Nowak 

2 THE WITNESS:fb)(41 

3 (b)(4) 

4 

5 

6 

7 MR. RAISLER: l(b)(4I I 

8 (b)(4) 

9 

10 

11 

12 

13 

14 Q fb)(4) I 

15 rb)(4) 

16 I 

17 A fb)(4) I 

18 KbJ(4) I 

19 Kb)(4) I 

20 

21 

Q 

A 

b)(4) 

"b")(4"1 _____ _._, 

22 (b)(4) 

23 

24 

25 (b)(4) (b)(?)(C) (b)(4) 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 117-120 
Page 121 Page 123 

1 Nowak Nowak 

2 (b)(4) 2 b)(4) 

3 3~ ,, , 

4 4 A (b)(4) I 

5 5 b)(4) 

6 6 

7 7 

8 8 b)(4) ll(b)(7)( 

9 9 b)(4) 

10 10 

11 Q fb)(4) I 11 

12 ~b)(4) 1? 12 

13 A (b)(4) I 13 

14 Q b)(4) I 14 

15 (b)(4) I? 15 Q :b)(4) 

16 A Kb)(4) I 16 tb)(4) _ 

17 Q 

18 KbJ(4) 

(b)(4) 

I? 

I 17 

18 

A 

O 

b)(4) 

.._.,_-~-~~~-~~ 

What does the basis point 

19 A fb)(4) I 19 correspond to? 

20 (b)(4) 20 A A basis point is one 

21 21 one-thousandth of a percent. Wait, one 

22 22 one-hundredth of a percent. 

23 23 Q 1001, right? 

24 24 A .0001. 

25 25 Q ~b")(4")---------~ 

Page 122 Page 124 

1 Nowak 1 Nowak 

2 (b)(4) 2 b)(4) 

3 3 (b)(4) ? 

4 4 A (b)(4) 

5 5 Q b)(4) 

6 6 b)(4) ? 

7 7 A b)(4) 

8 8 b)(4) 

9 9 Q b)(4) Mr.l(bJ(7J(CJ 

10 10 l(b)(4) I? 

11 11 A f5i(ijl 

12 12 Q b)(4) I? 

13 13 A b)(4) I 

14 14 fb)(4) I 

15 15 Q fb)(4) p 

16 16 A KbJ(4) I 

17 17 (b)(4) 

18 Q fb)(4) I 18 

19 (b)(4) I 19 

20 1(b)(4) I 20 

21 A b)(4) I 21 

22 Q (b)(4) i? 22 

23 A b)(4) I 23 

24 Q (b)(4) 24 

25 (b)(4) 25 ~-------------­

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 121 -124 
Page 125 Page 127 

1 Nowak Nowak 

2 (b)(4) 2 Q b)(4) 

3 3 (b)(4) ? 

4 4 A b)(4) 

5 5 b)(4) 

6 Q l(b)(4) 6 Q b)(4) 

7 (b)(4) 7 b)(4) 

8 8 

9 9 

(b)(4) 10 I? 10 

11 A fb)(4) I 11 b)(4) 

12 (b)(4) 12 A fb)(4) I 

13 13 (b)(4) 

14 14 

15 Q ~b)(4) I 15 

16 (b)(4) I 16 

17 A ~b)(4) I 17 

18 (b)(4) 18 

19 19 

20 20 

21 21 

22 22 

23 Q fb)(4) I? 23 Q fbl(4) I 

24 

25 

A 

Q 

24 

25 

b)(4) 

I 

Page 126 Page 128 

1 

;r 

4  

5 A 

6 Q 

Nowak 

~ \,,-,,-,,-'----------~ l(b)(4) 

1 

2 ~b)(4) 

3 A 

4 ~b)(4) 

5 Q 

6 A 

Nowak 

fbl(4) 

I 

b)(4) 

b)(4) 

'! 

I? 

I 

I 

7 (b)(4) 7 Q b)(4) I 

8 

9 l,c(b~)(4")----------~1"7-~ 

8 

9 

b)(4) 

I 

1 O 

11 

A 

Q fb)(41 I ~(~b)(=41~-------~I 

10 

11 

b)(4) 

A b)(4) I 

12 l(b)(4) I? 12 (b)(4) 

13 A fb)(4) 13 

14 (b)(4) 14 

15 15 

16 

17 

16 

17 

Q 

(b)(4) 

fb)(4) I (? 

18 Q (b)(4) p 18 A b)(4) I 

19 A (b)(4) I 19 Q b)(4) I 

20 (b)(4) 20 b)(4) I 

21 21 b)(4) 7 

22 22 A b)(4) I 

23 23 Q b)(4) I 

24 

25 

24~ 25 b)(4). 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 125-128 
Page 129 Page 131 

1 

2 A fb1(4) 

Nowak I 2 (b)(4) Nowak 

3 a 

4 vb)(, I? 

(b)(4) 3 

4 

5 A Kbl(4) I 5 

6 (b)(4) 6 (b)(4) ,, 

7 7 A Kb)(4) I 

8 8 b)(4) 

9 9 

10 10 

11 11 

12 12 a fb)(4) 

13 a (b)(4) I 13 (b)(4) 

14 !(b)(4) 

15 A ~ r 14 

15 A b)(4) I 

16 a l(b)(4) I{ 16 a b)(4) 

17 A Kb)(4) ll(b)(7)(C) l(b)(4) I 17 (b)(4) 

l(b)(4) 18 b)(7)(C) I 18 

19 (b)(4) 19 (b)(4) I( 

20 a (b)(4) ~ 20 A KbJ(4) I 

21 A (b)(4) I 21 b)(4) 

22 a (b)(4) I 22 

23 !(b)(4) 23 

24 A fb1(41 24 

25 l(b)(4) 25 

Page 130 Page 132 

1 Nowak 1 Nowak 

2 Q l(b)(4) I b)(4) 2 

3 l(b)(4) I 3 a b)(4) 

4 (b)(4) 1? 4 (b)(4) 

5 A fb)(4) I 5 A b)(4) 

6 (b)(4) 6 (b)(4) 

7 7 

8 8 

9 9 

10 10 

11 11 

12 12 

13 13 

14 14 

15 15 

16 16 

17 17 

18 18 

19 19 

20 20 

21 21 

22 22 EXAMINATION BY MR. HAYECK: 

23 23 a b)(4) 

24 fb)(4) I? 24 25 ~-;c:----,,,=--------r--~ Q fb)(4) I 25 A fb)(4) 

~--------~ 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 129-132 
1 ! Page 133 Page 135 

Nowak Nowak 

2 I'm confused. l(b)(4) 3 Q ~,b~)(4~)~------~ 

: [b)(4) 

6 EXAMINATION BY MS. RYALL: 6 A Okay. 

7 Q b)(4) 7 Q f'~b"')(4"1~-----~I 

8 !(b)(4) I? 8 b)(4) 

9 A l(b)(4) 

~----~ 9 

1 O Q I'm going to get into that 10 

11 later. 11 

12 A Okay. 12 

13~-A-.f~'b)"'(4')--------~I--~ 13 EXAMINATION BY MR. HAYECK: 

(b)(4) 14 (b)(4) 14 0 I I 

15 b)(4) 15 0 

(b)(4) I 16 16 A 

17 17 MR. RAISLER. tb)(4I 

18 ? 18 b)(4) 

(b)(4) 

H 

19 A 19 THE WITNESS: (bl(4I 

20 0 (b)(4) 20 (b)(4) 

21 EX7A7M~IN~A~T~IO=N~B~Y'M=R~. H~A~Y~E""CK: 

l(b)(4) 22 Q fb)(4) I 

~: l(b)(4) 24 A fb1(4) 

25 (b)(4) 

Page 134 Page 136 

1 Nowak Nowak 

2 (b)(4) 2 ~b)(4) I 

3 3 KbJ(4) I? 

4 A b)(4) I 4 ~---------'-., 5 5 0 b)(4) I 

6 ~ r)(4) 

7 I 

8 8 A KbJ(4l I 

9 9 (b)(4) I 

10 10 l(b)(4) I 

11 11 Q b)(4) I? 

12 A ~b~l(4~1-------a::;-I~ 12 

13 13 EXAMINATION BY MS. RYALL: 

14 0 fb)(4) 14 Q fb)(4) I I 

15 (b)(4) 15 fb)(4) 17 

fb)(4) 16 16 A I 

17 17 (b)(4) 

(b)(4) 18 I? 18 

19 A Say that one more time. 19 

20 MR. HAYECK: Can you read that 20 

21 back, please. 21 

fb)(4) 22 (Whereupon, the record was read 22 0 I 

23 as requested.) 23 l(b)(4) 

24 A It's the first part of the 24 

25 question that in terms otl(bJ(4l 1-- I'm sorry, 25 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 133-136 
Page137 Page 139 

1 Nowak Nowak 

2 A b)(4) 2 full amount, so like a fixed amount of money 3 0 m(b~)("4)-----~-~ 3 at expiry, whether you are above or below a 

4 (b)(4) 4 strike. So it's not the right to buy gold 

5 A b)(4) 

~-----~ 5 at 1,200. If gold is above 1,200 you get an 

6 EXAMINATION BY MR. SMITH: 6 exact amount, say $1 million, and if it's 

7 Q (b)(4) 7 below you get nothing. So it's an all or 

8 (b)(4) 8 nothing payout. 

9 (b)(4) ? 9 0 You can do it the other way 

10 A 1 o also? 

11 EXAMI RYALL: 11 A Exactly. 

12 0 12 0 That sounds pretty risky. 

13 (b)(4) 13 A fb)(4) I 

14 14 (b)(4) 

15 ~(b~)("4)----------,,-----~ 15 

16 A b)(4) 16 

17 0 "!(b"'l("'4)=---------- 17 

18 l(b)(4) 

19 (b)(4) I? 198 ~-~~=~-=-----~ MS. RY ALL: Why don't we break 

20 A b)(4) 20 here. It's almost 1 o'clock, and then 

~---------~ 

21 !/bl/41 21 come back in an hour. 

22 Q (b)(4) 22 MR. RAISLER: Sounds good. 

23 (b)(4) 23 MS. RYALL: Off the record. 

24 !(b)(4) r 24 (Whereupon, a luncheon recess 

25 A ~(b")(4")---------~ 25 was taken.) 

Page 138 Page 140 

1 Nowak 1 Nowak 

; rb)(4) 2 MS. RYALL: Can you mark this as 

3 the next exhibit. 

4 0 fb)(4) 4 (Letter was marked as 

5 1{6)(4) 5 Commission's Exhibit 6 for 

6~? 6 identification, as of this date.) 

7 A 7 MS. RYALL: Let's go back on the 

8 0 ? 8 record. 

9 A b)(4) 9 EXAMINATION BY MS. RYALL: 

10 (b)(4) 1 O O Before we move on I just want to 

11 (b)(4) 11 jump back to some personal details. 

12 0 If you can describe it in simple 12 Have you ever been known by any 

13 terms, what is that trade comprised of? 13 other name? 

14 A fb)(41 I 14 A No. 

15 (b)(4) 15 0 How do you pronounce your last 

16 16 name? 

17 17 A It's pronounced Nowak, but it's 

18 18 N-O-W-A-K. It's Polish. 

19 19 0 Whatis ourdateofbirth? 

20 20 A b)(6) (b)(7)(C) 

21 21 Q What are the last four digits of 

22 22 your Social Security number? 

23 A :bJ(6) 23 ~------------~ 

24 0 What is a digital option? 24 0 Do you have a personal e-mail 

25 A It's an option that pays out a 25 address? 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 137- 140 
Page 141 Page 143 

1 Nowak Nowak 

2 A Yes. 2 b)(4) 

3 0 What is that? I'm not going to 3 I 

4 contact you. I just want to know what it 4 Q b)(4) I? 

5 b)(4) is. 5 A I 

6 A lt's~l(b_l(B_l_(b_l(_71_(c_I _____ ~ 6 b)(4) 

7 !(b)(6) _ I 7 

8 0 What about personal phone 8 

9 numbers? 9 

10 A My cell hone is bJ(6J (bJ(7J(CJ 10 

11 and my home is bJ(5l (bl(7J(CJ 11 

fb)(4) 12 Q What is your residential address 12 Q I 

13 currently? 13 l(b)(4) ,? 

14 A ~b~)(6")"(b~)(~7)~(C")---, 14 A fb)(4) I 15 (b)(6) (b)(7)(C) 15 ib)(4) 

16 I 16 ~~~=~-------~ 17 Q ~)( . 17 Q Who are the brokers that J.P. 

18 A tb)(BI! 18 Morgan uses on the floor for metals? 

19 Q How long have you lived there? 19 A (bJ(4l is one. 

Q b)(4) ? 20 A In that house sincet:bJ(~l -1 20 

21 0 I want to talk about EFP's. 21 A I don't know the spelling. 

22 A Okay. 22 just hear it. (bJ(4l is one. "f:b~l("4I-7 

(b)(4) ? 23 Q Do you know what an EFP is? 23 

24 A Yes. 24 b)(4) 

25 Q Describe it for me. 25 A b)(4) is another 

Page 142 Page 144 

1 Nowak 1 Nowak 

2 A It's an exchange for physical. 2 one. Kbl(4l I 

3 It's a type of swap where you exchange a 3 {b)(4) 

4 futures contract for a spot trade in the 4 U b)(4) I 

5 same volume. 5 (b)(4) ? 

6 Q What is the purpose of it? What 6 A (b)(4) I 

7 is it used for generally? 7 (b)(4) I 

8 A l(b)(4) I 8 Q What about 1nd1v1duals who work 

9 (b)(4) 9 for those companies that are actually on the 

10 10 floor, do you know any of their names? 

11 11 A b)(4) 

(b)(4) 12 12 

(b)(7)(C) 13 13 

14~-a~~F-u~n~c~t,7o7na~l"ly~,"h7o~w~dTo~e~s~,,t~w~o7rk"?,-, 14 Q b)(4) 

15 How do you execute it? 15 !(b)(4) I? 

16 A l(bl(4I I 16 A fbJ(4) 

17 (b)(4) 17 l(b)(4) I 

18 18 U Functionally, how does the spot 

19 19 part of the EFP ha en? 

20 20 A b)(4) 

21 (b)(4) 21 

22 22 

23 23 

24 24 

25 25 ~-------------~ 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 141 - 144 
Page 145 Page 147 

1 Nowak Nowak 

2 a 

3 (b)(4) 

(b)(4) ~ r)(4) 

4 4 Q fb1(4) p 

5 (b)(4) ? 5 A f~b~)(4~) --~ 

6 A b)(4) 6 0 For the forwards, are the terms 

7 l(b)(4) 7 pretty standard other than price and time 

8 a Are those confirmed on paper? 8 period? 

9 A ~b)(4) I 9 A ~b)(4) 

1 Q (b)(4) 10 a ~ 

11 11 j{b)(4) 

12 12 A fb)(4) I 

13 13 b)(4) 

14~------------~ 14 

15 0 How are the spot transactions 15 

16 confirmed? 16 

17 A f~,b~l(4"1-----~I 17 ~~-~----------------~ 0 Do you know of any document that 

18 ~(b~)(-41-~------~lc='? 18 actually sets forth what the terms are, or 

19 a ib1('1 I 19 is it understood it's going to happen in two 

20 ~(b~)("41-~--~I-------~ 20 days? 

21 A Kb)(4) I 21 A b)(4) 

22 (b)(4) 22 (b)(4) 

b)(4) 23 23 a 

24 24 (b)(4) 

25 25 ~----------------~ 

Page 146 Page 148 

1 Nowak 1 Nowak 

2 (b)(4) 2 b)(4) ? 

b)(4) 3 3 A 

4 b)(4) 4 

5 5 

6 6 

7 7 

8 8 

9 9 

10 10 ~~~~--~-----~ 11 11 a I have seen instant messa es 

12 12 where someone will say bJ(4l 

13 13 b)(4) ? 

b)(4) 14 Q For forwards, how are those 14 A 

15 memorialized, if they are, on paper? 15 fb1(4) 

16 A What do you mean? 16 a I'm going to go to the next 

17 0 Confirmed. 17 exhibit, which has been marked as No. 6. 

~----------~ 18 A l(b)(4) I 18 will ask you to take a look at it. Take as 

19 (b)(4) 19 much time as you need. 

20 20 MR. SCHROEDER: Do you have 

21 21 copies? 

22 22 MS. RYALL: Yes, I'm sorry. 

23 23 MR. SCHROEDER: Thank you. 

24 24 A Okay. 

25 25 a So this is an exhibit that is 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 145- 148 
Page 149 Page 151 

1 Nowak Nowak 

2 six a es. (bJ(4l 2 b)(4) 

3 (b)(4) 3 

4 (b)(4) Have you seen this before? 4 

5 A b)(4) 5 

6 (b)(4) 6 

7 i(b)(4) I 7 

8 a (b)(4) 8 

9 l(b)(4) I? 9 

fbl(4) 10 A ~ 10 a 

11 a And you just read it, correct? 11 ~b)(4) 

12 A Yes. 12 ~b)(4) I! 

13 a Is everything in there correct 13 A ~b)(4) I 

14 to your knowledge? 14 b)(4) 

15 A ~b)(4) I 15 

16 (b)(4) 16 

fb)(4) 17 17 a I 

18 18 (b)(4) 

19 19 

20 a l(b)(4) 20 (b)(4) 1. I 

21 (b)(4) I 21 A l(b)(4) I 

22 A Yes. 22 b)(4) 

23 a I think we talked about a cou le 23 

b)(4) 24 of these. 24 

25 (b)(4) 25 

Page 150 Page 152 

1 Nowak 1 Nowak 

2 A b)(4) I 2 b)(4) 

3 

4 

5 

6 

7 

a 

A 

a 

(b)(4) 

A 

b)(4) 

b)(4) t 

{b)(4) 

,., fb1(4) ! 

I? 

I 

3 

4 \,(b'e)(s,4)-----=-,;b:;;)(-,;7);,( hlb)1'(4') ----~-, 

5 (b)(4) ' 

6 b)(4) (b)(4) 

7 (b)(4) 

8 

9 

10 

a 

{b)(4) 

A 

(b)(4) 

(b)(4) I P. 

8 a 

9 {b)(7)(C) 

10 A 

When you say do you mean li.!i:.i...' I? 

KbJ(7)(C) I, yes, correct. ~ 11 

12 

13 

a 

(b)(4) 

(b)(4) I 

I 

11 ib)(4) 

12 

13 a fb)(4) 

14 (b)(4) I? 14 b)(4) 

15 A ~b)(4) I 15 

16 (b)(4) 16 

17 17 ? 

18 18 A fb)(4) I 

19 19 __1?)(7)(1(b)(4) 

20 20 b)(4) 

21 21 

22 22 

23 23 Q I want to talk a little bit 

24 a b)(4) I? 24 about J.P. Morgan's metals business before 

25 A b)(4) I 25 the merger with Bear Stearns. 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 149-152 
Page 153 Page 155 

1 Nowak 

2 A Okay. 

3 0 How is what you are doing now or 

4 since 2008 different from what the business 

5 was before the merger? 

6 A In terms of the futures? 

7 a The types of trades you're doing 

8 and the amount of your focus on one or the 

9 other. 

10 A b)(4) 

11 (b)(4) 

12 Q (b)(4) 

13 =~A:.__tb::)(~4~)::::::::::;:;.;;;;;;-;~~~~~~~_=--7--"---i 14 l(b)(4) I~)(7)((b)(4) 

15 (b)(4) 

16 Q (b)(4) 

17 l(b)(4) I? ~--------------' 

18 A Kb)(4) I 

19 (b)(4) 

20 

21 

22 

23 

24 

25~(~b)~(4~)-------------,,~b,)n(7v)(-,-----'I 

Page 154 

1 Nowak 

~ l(b)(4) 

6 Q Who was your main trader before 

7 the merger for silver and gold? 

8 A Spot or forwards? 

9 0 Start with spot. 

1 O A In London it wasfbJ(7J(CJ 

11 in New York it was KbJ(7J(CJ I. 

12 Q In forwards? 

13 A That was~l(b~l(7-l(~cI---I in both 

14 time zones. 

15 Q ~rb~)(4~)--------~ 

16~ 

17~? 

18 A b)(4) I 

19 

20 

0 

A 

(b)(4) 

b)(4) I 

I 

21 (b)(4) 

22 

23 

24 

25 

Nowak 

2 b)(4) 

3~--------------~ 

4 Q You mentioned earlier about all 

5 the exotic options. You don't have to 

6 necessarily describe them in detail, but can 

7 you tell me what those are? 

8 A Variance swaps, one touches, 

9 knock in options, knock out options, range 

1 O binaries, volatility swaps, knock out 

11 forwards, dual and expiry digitals. 

12 0 Dual? 

13 A Dual, D-U-A-L. 

14 EXAMINATION BY MR. HAYECK: 

15 Q Could you give us if possible 

16 two sentences or less on each one. 

17 A Okay. Variant swap is a 

18 contract where a client either buys or sells 

19 where the realized volatilitv is aaainst a 

20 certain strike. l(bl(4l I 

21 b)(4) 

22 

23 

241,ev,,--,-~~=--~~-~-----' 

25 {bl(4l I A volatility swap is almost the same 

Page 156 

1 Nowak 

2 thing, except volatility is a different 

3 formula. A knock in option is a call or put 

4 option that only knocks in if a certain spot 

5 level is traded. A knock out option is a 

6 call or a put option that only knocks in --

7 knocks out if a certain spot level is 

8 triggered. 

9 EXAMINATION BY MS. RYALL: 

10 Q What does that mean, knock in or 

11 knock out? 

12 A Knock in means it actually -- a 

13 knock in option doesn't exist until the 

14 knock in level is touched. The knock out 

15 exists until the knock out level is touched. 

16 A range binary is an option that pays out, a 

17 spot remains within a certain range during a 

18 certain window of time. A dual at expiry 

19 digital is an option that will if two 

20 criteria are met, so commodity X is above a 

21 certain level and commodity Y is above a 

22 certain level, both of those criteria are 

23 met, it pays out a certain amount. Regular 

24 digital is just a simple one. If one, if 

25 one commodity is above or below a certain 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 153-156 
Page157 Page 159 

1 Nowak 

2 barrier level you get paid a fixed amount. 

3 l(b)(4) 

4(bJ(4l I An accumulator is a 

5 trade where you will either buy or sell spot 

6 at a certain price as long as spot remains 

7 in a certain range. 

8 0 Is that accumulator? 

9 A An accumulator. Accumulator is 

1 0 the word. 

11 ~b")(4")---------~ 

12 And then there is a basket option. That 

13 usually means you will purchase an option on 

14 three different commodities let's say, but 

15 only get paid out on the one that's the 

16 least performing. l(bl(4l I 

17 (b)(4) 

18 

19 

20 

21 

22 t,;;;;;,----i~~~~--~~~~_, 23 (bl(4l I And then I guess the last one is a 

24 correlation swap. That is just like a 

25 variant swap or volatility swap, but it's 

Page 158 

1 Nowak 

2 not betting on the volatility of the market. 

3 It's betting on the correlation between two 

4 different markets. fbl(4l I 

5 (b)(4) 

6 

7 

8 

9 ~,U.,-------,(,sbl"(4s=) --------,,-~ 

10~? 

11 A b)(4) I 

12 Q b)(4) i? 

13 A b)(?)(C) l(b)(4) I 

14 (b)(4) 

15 

16 (b)(4) l(b)(?)(C) I 

17 (b)(?)(C) I. 

18 Q (b)(4) I? 

19 (b)(4) " 20 A fb)(4) I 

21 (b)(4) 

22 

23 

24 

25 Q (b)(4) I? 

Nowak 

2 A b)(4) 

~---------~ 

3 EXAMINATION BY MR. SMITH: 

4 Q b)(4) 

5 (b)(4) 

6 7 '----A----,;cb"°)(4"1-----,.----' 

8 Q b)(4) 

~~~ 

9 EXAMINATION BY MS. RYALL: 

10 Q fb)(4) I 

11 

12 

(b)(4) 

MR. RAISLER: fbl(4I 

I' 

I 

13 A !(bl(4) I 

14 ~b~)(4~)--'------------..L~ 

15 

16 

17 

18 

19 

20 '-=E_X_A_M-IN_A_T-IO~N-B_Y_M-R-. s-M-IT_H_: ___ _, 

21 Q l(b)(4) f 

22 A fb1(41 

23 j{b)(4) I 

24 MS. RY ALL: We will mark this as 

25 Exhibit 7, please. 

Page 160 

1 Nowak 

2 (E-mail was marked as 

3 Commission's Exhibit 7 for 

4 identification, as of this date.) 

5 Q I am handing you what has been 

6 marked as Exhibit 7. Could you take a look 

7 at that. It's two pages, an e-mail t:bJ(4l I 

8 fb1(41 1- The first page is Bates 

9 stamp JPM-AG 00157471. 

10 A Okay. 

11 0 I'm mostly going to focus on the 

12 second paqe, but the subject on the first 

13 page is, Kbl(4l 

14 (b)(4) 

15 

16 

17 (b)(4) t? 

18 A KbJ(4) I 

19 (b)(4) 

20 

21 

fb)(4) 22 Q 

23 (b)(4) 

24 I 

25 Kb)(4) (? 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 157-160 

I 
Page 161 Page 163 

1 Nowak Nowak 

2 A fb)(4) 2 A ~b)(4) 

3 b)(4) fb)(4) 3 Q 

4 Q Kb)(4) 4 fb)(4) I r 

5 (b)(4) 5 A b)(4) 

6 6 fbJ(4) 

Q 7 fb)(4) 7 r (b)(4) 8 I? 8 A fb1(4) 

fb)(4) 9 A I 9~ 

10 (b)(4) 10 Q b)(4) r 

11 b)(4) 11 A I 

12 12 (b)(4) I 

13 13 l(b)(4) 

14 14 Q fb)(4) ? 

15 15 A "'T"hacct;-:'s',"b1"'(,"'1(c"'1=--------,,("bl"(''I -,I 

16 0 So 16 ~b)(4) l(b)(7)(C) 1f you look at the second I 

17 page of this exhibit, which is 157472, I 17 and_~l(b~l(7~1(,,c,,1 eea=-==-----~ 

18 oulled this1(bJ(4l I 18 Q b)(4) I? cf=~------~ 19 (b)(4) t 9 A b)(4) I 

20 Q "b~)(4")~--------~I? 20 

21 A -- tb)(4) I 

21 ~~~~-------~ 

22 A Okay. 22 it'Si(b)(7)(C) I andl(bJ(7J(CJ 

23 Q (b)(4) 141 

24~(b~)(4")-~---------'-, ~! r( I 

25 (b)(4) 25 ~-=o=--'r:"_b)":(7:")(C:1'.'._'.'._'.'._'.'._"'.."li-s-::th_e_n_e_w_gu_y_~ ? 

Page 162 Page 164 

1 Nowak Nowak 

2 A fb)(4I I 2 from ~l(b~l(7~1(C"I ~p 

3 (b)(4) 3 A Yes 

Q b)(4) ,, 4 4 

b)(4) 5 5 A I 

6 6 ~b)(4) 1~b)(7)(C) I_ 

b)(4) 7 7 Q 

8 8 l(b)(4) I! 

9 9 A ~b)(4) I 

10 10 (b)(4) 

11 11 

12~-----------~-~ 12 

13 Q (b)(4) KbJ(4) I 13 Q ? 

14~(b~)(4")-~--------~-- ~b)(4) I 14 A I 

15 (b)(4) i? 15 (b)(4) b)(7)(C) I 

16 KbJ(4) 16 A K~bii)(4ii)-----~---~ I 

17 Q fb)(4) 17 Q b)(4) II ~}(71( ~~l(I? I 18 (b)(4) C) 18 A b)(4) KbJ(4) I 

b)(4) " 1(b)(7)(C) I (b)(4) 19 A 19 I 

20 l(b)(7)(C) I and ~bJ(7J(CJ Q I. 20 (b)(4) ~;Ui(p 

21 Q (b)(4) KbJ(4) I 21 A 

22 (b)(4) (b)(4) (b)(7) r 22 1

23 A (b)(4) I 23 forl(b)(7)(C) ll(b)(4) 

24 Q b)(4) I 24 Q l(b)(4) 

25 (b)(4) 25 l(b)(4) I' 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages161-164 
Page 165 Page 167 

1 Nowak Nowak 

2 (b)(4) I? 2 b)(4) 

fb)(4) 3 A I 3 

4 (b)(4) 4 

5 5 

6 6 

b)(4) 7 7 Q I? 

8 Q b)(4) IK~l(7) (b)(4) I? 8 A b)(4) I 

b)(4) 9 A I 9 fb1(4) 11~1q b)(4) I 

10 (b)(4) [_b)(7)(1Kb)(4) Q KbJ(4) II I 10 I 

11 (b)(7)(C) fb)(4) I 11 [W' 

12 12 A ~b)(4) l!iill±D I 

13 Q l(b)(4) r 13 b)(4) 

14 A ~ 14 

15 Q l(b)(4) Wb)(71(fbi(4) p 15 

16 A (b)(4) 16~~~=--------~-J 

17 Q (b)(4) ? 17 Q fb)(4) I 

18 A (b)(4) 18 ~b)(4) I? 

19 (b)(4) (b)(7)(C) 19 A fbl(4I I 

20 (b)(7)( • 20 l(b)(4) I 

21 Q b)(4) ? 21 Q fb)(4) I 

22 A b)(4) 22 {b)(4) l(b)(7)(C) U(b)(4) Kb)(7)(C) l(b)(4) I 

23 (b)(4) 23 ~'-'!\' !\'--'! Kb)(4) 1? 

24 24 A ~b)(4) I 

25 (b)(4) 25 I 

Page 166 Page 168 

1 Nowak 1 Nowak 

2 (b)(4) b)(4) 2 

3 3 Q fb)(4) I? 

Q b)(4) 4 1? 4 A ~b)(4) I 

5 A b)(4) l(b)(7)(C) I 5 (b)(4) 

Q (b)(4) 6 I 6 

(b)(4) 7 r. 7 

8 A KbJ(4) I 8 

9 (b)(4) 9 

10 10 

11 11 

12 12 

13 13 

b)(4) 14 Q I? 14 

(b)(4) 15 A 15 

(b)(4) fb)(4) 16 I 16 Q I 

{b)(4) 17 (b)(4) 17 Q r. I? 

18 A That's KbJ(7J(CJ 18 A fb)(4) I '· 19 0 19 b)(4) 

20 A 20 

21 0 ? 21 

22 A ~bc;;l(7;cl(;cc1;==c;-a~nd~b~l(7~1(C~I-~ 22 ~---====--; 23 Q 23 b)(4) 

24 ~ ~--------~ 24 Q Kb)(4) I 

25 A b)(4) 25 A Kb)(4) I 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 165-168 
Page 169 Page 171 

1 Nowak Nowak 

2 (b)(4) ~ (b)(4) I 

3 

4 4 ~(b"'11,"1------------s-I'?~ 

5 5 A fb)(4I I 

6 6 b)(4) 

7 7 

8 8 

9 Q fb)(4) I 9 

10 (b)(4) I? 10 

11 A fb)(4) I 11 

12 (b)(4) I 12 

13 

14 

Q 

A 

Kb)(4) 

fb)(4) 

1? 

I 

13 

14 ~~-------------~ Q Are there spec1f1c trades or 

15 (b)(4) I 15 strategies that are associated with 

16 Q i(b)(4) I? 16 individu,,a;,,I b,,,o=o~k=s?~_ ------~ 

17 A l(b)(4) ' 17 A l(b)(4l 

18 (b)(4) 18 l(b)(4) ' 

19 19 Q b)(4) I 

20 20 A b)(4) I 

21 21 (b)(4) 

22 Q {b)(4) I 22 

(b)(4) 

1(b)(4) [? 

A KbJ(4) I 

Page 170 Page 172 

1 Nowak Nowak 

2 Q 

3 !(b)(4) ! (b)(4) ~---------~ 

2 (b)(4) 

3 

4 A ~b)(4) I 4 

5 (b)(4) 5 6 ~-Q~---,;;;b;;;)(4;c) ---------,--~ 6 

7 7~? 

8 8 A r~b~11,~1--'----------~ 

9 9 Q fb)(4) 

10 1 o tb)(41 I? 

11 11 A KbJ(4) I 

12 12 b)(4) 

13 13 

14 14~--=---------.--~ 1

15 15 =.co,___,,r_b11_41 ______ --c~1 

16 16 i(b)(4) ~ 

17 17 A ~b)(4) I fb)(4) 18 Q 18 (b)(4) 

19 l(b)(4) 1? 19 

20 A lb)(4) I 20 

(b)(4) 21 Q I? 

(b)(4) 21 ~~~=--------~~ 22 A I 22="Q=---_,_flb_)l4_1 ___ _,,cc-----JI 

23 ~b)(4) I? ~~ rb)(4) 

24 A fb)(4) I 

25 Q .. l (b-)(4_1 __________ ~ 25 l(bl(4l I 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 169-172 
Page 173 Page 175 

1 Nowak Nowak 

2 (b)(4) 2 b)(4) 

3 3 

4 4 

5 5 

6 6 

7 7 

8 8 

9 9 

10 10 

11 11 

12 12 

13 13 

14 14 

15 Q l(b)(4) I 15 

16 l(b)(4) I 16 

17 1(b)(4) I? 17 

18 A l(b)(4) (b)(7)(C) KbJ(4) I 18 

19 (b)(4) 19 

20 20 

21 21 

22 22 

23 23 

24 24 

25 Q l(b)(4) I 25 

Page174 Page 176 

1 Nowak Nowak 

2 1(b)(4) (? 2 !/bl/41 

3 A (b)(4) I 3 Q rb)(4) 

4 (b)(4) 4 fb1(4) I? 

5 5 A rb)(4) 

6 6 b)(4) 

7 

8 Q ~b)(4) I 

7 Q 

8 j{b)(4) 

Kbl(4] 

I? 

9 1(b)(4) 

10 l(b)(4) 

11 A [bJ(4) 

~ 

I 9 

10 

11 

A 

Q 

A 

rb)(4) 

yb)(4) I 

b)(4) 

I r' 

12 Q l(b)(4) I 12 Q We are finished with that 

13 (b)(4) r? 13 exhibit. 

14 A fb)(4) I 14 I want to talk a little bit 

15 (b)(4) 15 about bJ(4J 

16 16~ 

17 17 A Okay. 

18 18 Q ~b)(4) I 

19 19 (b)(4) 

20 20 

21 21 

22 22 b)(4) r1 

23 23 A ~b)(4) I 

24 24 Q fb)(4) I 

25 25 fb)(4) I? 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 173-176 
Page 177 Page 179 

1 Nowak Nowak 

2 A rb)(3) 7 USC §12 (CEA) (b)(4) 2 b)(4) 

3 (b)(3) 7 USC §12 (CEA) (b)(4) 3 

4 4 

5 5 

6 MR. RAISLER:f~/\~/7USC §12(CEA) 6 (b)(4) '" 

7 (b)(3) 7 USC §12 (CEA) (b)(4) 7 (b)(4) 

8 8 

9 9 

10 ,~

1

PF I? 10 

11 MS RYALL· f?l(3J7usc §12 I 11 " " rC:/\\ fh\fA\ lb1(4) Q b)(4) 12 12 17 

13 MR. RAISLER: KbJ(3)7USC §12 13 A b)(4) I 

14 ~bl/317USC 1$12 14 b)(4) 

15 A l(b)(3) 7 USC §12 (CEA) (b)(4) I 15 

16 (b)(3)7USC §12(CEA) (b)(4) 16 

17 I 17 

fb)(3) 7 USC §12 (CEA) (b)(4) 18 Q I 18 

19 b)(3) 7 USC §12 (CEA) (b)(4) 19 

20 20 

21 ~b)£3l!~~,sc I? 21 

22 A ~b)(3) 7 USC §12 (CEA) (b)(4) 22 Q Kb)(4) I 

23 (b)(3) 7 USC §12 (CEA) (b)(4) I 23 ~b)(4) I 

24 Q l(b)(3) 7 USC §12 (CEA) (b)(4) I 24 ~b)(4) f 

25 (b)(3) 7 USC §12 (CEA) (b)(4) I 25 A t-b)(4) I 

Page 178 Page 180 

1 Nowak 1 Nowak 

2 (b)(3) 7 USC §12 (CEA) (b)(4) 2 Q fb1(4) 17 

3 3 A b)(4) 

4 ~\~~),~31".7~.u0,~.c.c~§~l02-" [!.~--------~ 4 KbJ(4) I 

5 A ~b)(4) I 5 Q fb1(4) 

6 (b)(4) 6 (b)(4) I 

7 Q l(b)(4) 7 b)(4) ? 17 

l(b)(4) 8 A b)(3) 7 USC §12 (CEA) (b)(4) 8 A I 

g (b)(4) I 9 (b)(3) 7 USC §12 (CEA) (b)(4) 

10 l(b)(4) fbl(7J(C) 10 

11(b)(7)(C) 11 

12 (b)(4) I 12 

(b)(4) 13 Q I? 13 ~-------------~ 14 A (b)(4) I 14 MS. RYALL: Let's mark this as 

15 (b)(4) 15 Exhibit 8, please. 

16 16 (E-mail chain was marked as 

17 17 Commission's Exhibit 8 for 

18 18 identification, as of this date.) 

19 (b)(4) lb)(7)(C) I 19 0 If you can take a look at this 

(b)(4) 20 I 20 chain of e-mails. 

21 Q l(b)(4) 17 21 A Okay. 

22 Q ~~======~-~ b)(3) 7 USC §12 (CEA) (b)(4) 22 =,;_A:___,(b=)(='l========I __ ~ 23 (b)(4) 23 (b)(3) 7 USC §12 (CEA) (b)(4) 

24 24 

25 f~b=)(3=)~7=u=s=c=§=12=(=c=eA=)=(b=)(=4)===src-----~ 25 ~---------------~ 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 177-180 
Page 181 Page 183 

1 'hiffi'lNowak Nowak 

2 A i"-1 I 2 A fbl(4) 

3 l(b)(4) 3 ~-Q=;_,,-,,--'-(b~)(-3)-7~U~S~C""§ 1~2~(C_E_A_) _(b .. )(4_1 ____ .,I 

4 (b)(3)7USC§12(CEA)(b)(4) I? 4 MR. RAISLER: Kb)(3)7USC §121 

5 A (b)(3) 7 USC §12 (CEA) (b)(4) I 5 (b)(3) 7 USC §12 (CEA) (b)(4) 

6 (b)(3) 7 USC §12 (CEA) (b)(4) 6 

7 7 

8 8 

9 9 

10 10 

12 11 11 THE WITNESS: f~1

~

3

li71

~ 1~2 §

12 12 (b)(3) 7 USC §12 (CEA) (b)(4) 

13 13 I 

Kb)(3) 7 USC §12 (CEA) (b)(4) 14 a I 

0 If you look at Exh1b1t 8, which 15 Kb)(3) 7 USC §12 (CEA) (b)(4) I? 

14 

15 ~~------~------~ 

16 is a chain of e-mails dated August 28, 2009. 16 A fb)(3) 7 I II C, r 

17 A Yes. 17 a Kb)(3) 7 USC §12 (CEA) (b)(4) I 

18 Q The first page is Bates stamped 18 (b)(3) 7 USC §12 (CEA) (b)(4) I? 

b)(3) I 19 number JPM-AG-UK 00212328. Have you read 19 A 

20 through that? 20 a b)(3) 7 USC §12 (CEA) (b)(4) I 

(b)(3) 7 USC §12 (CEA) (b)(4) 21 A Yes. 21 1 I 

22 Q b)(3) 7 USC §12 (CEA) (b)(4) 22 ~~)(3_)7USC §12 1\?Nl\~/\~/7USC §12(CEA) 

23 (b)(3) 7 USC §12 (CEA) (b)(4) ~~ rb)(3) 7 USC §12 (CEA) (b)(4) 

24 

25 

(b)(3) 7 USC §12 (CEA) (b)(4) 

A (b)(3)7USC 

&1?W.FA1 1h11.11 

? 

25 A j(bJ(3 I 

Page 182 Page 184 

1 

2 Q 

Nowak 

j{b)(3) 7 USC §12 (CEA) (b)(4) 

1 

2 Q 

Nowak 

fbJ(3)7USC §12(CEA) I? 

3 l(b)(3) 7 USC §12 (CEA) (b)(4) ? 3 A b)(3)7USC §12(CEA) 

4 A fb)(3) 7 USC §12 (CEA) (b)(4) 4 "(b-)(3_)_7_U_Si.,C~§-l-2 ~(C~EA_)_("'b)-(4~) ---r 

5 b)(3) 7 USC §12 (CEA) (b)(4) 5 EXAMINATION BY MR. HAYECK: 

6 6 Q b)(4) 

7 7 b)(4) 

8 8 

9 a fb)(3) 7 USC §12 (CEA) (b)(4) 9'i!("b)',;(4;=) =;;,l?---------~ 

10 (~)(3_)7USC §12 i? 10 A f~l(4l 

11 A l(b)(3) 7 USC §12 (CEA) (b)(4) I 11 b)(4) 

12 (b)(3) 7 USC §12 (CEA) (b)(4) I 12 

13 (b)(3) 7 

"~ ~ ~' ~ " - (b)(3)7USC §12 I 13 

14 (b)(3) 7 USC §12 (CEA) (b)(4) 14 

15 15 

16 16 

17 17 L" ___ ,;'~:c,'_-_Libb~lii'(~3ifl_71_uT_ss~cJi§2'1_22_(_(Cc~e_A\ii]i(~biiil~("'~l'_-_-_-_-_-_-_L~7, 

18 18 1!91!3F r 

19 A K~tb-)(3_)_7_U_S_C_§_l2_(_C_EA-)-(b-)(-4)---~I 19 

20 20 ~b)£3l!~~.sc I? 

21 21 Q KbJ(3)7USC §12(CEA) (b)(4) I 

22 a Andl(bJ(7J(CJ I is l(bJ(7J(CJ 22 (b)(3)7USC §12 I? I? 

23 A KbJ(4) 23 A b)(3) 7 USC §12 (CEA) (b)(4) I I 

24 a fb)(4) I 24 Q b)(3) 7 USC §12 (CEA) (b)(4) I 

25~? 25 l\~1\~/7USC §12(CEA) I? 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 181 -184 
Page 185 Page 187 

1 Nowak Nowak 

2 A (b)(3) 7 USC §12 (CEA) (b)(4) 2 b)(4) ? 

3 (b)(3)7USC §12(CEA) 3 A Can you ask that again, please. 

4 =,;Q:,,,.,,,;;l(b=;)(=;3):=7=;U;cS;;C=;§;;l=;2:=(C=E=A)=(=b)=('=I ===C: 

5 (b)(3) 7 USC §12 (CEA) (b)(4) 

4 Q 

5 b)(4) 

b)(4) 

6 6'==------------~ 7 (b)(4) 7 

7-=------------~ b)(4) 8 !(b)(3)!? 8 A I? 

9 A fbJ(3) 7 USC §12 (CEA) (b)(4) 9 Q 

( 10 

11 Q b)(4) I 

i! l(b)(3)7USC §12(CEA) (b)(4) A ~ 12 A fbI(4) 

13 EXAMINATION BY MS. RYALL: 13 l(b)(4) 

14 Q fbJ(3)7USC§12(CEA)(b)(4) 14~ 

~~ rb)(3)7USC §12(CEA) (b)(4) 15 Q kfiliill 

16 A b)(4) 

17 A fbI(3) 'I 17 (b)(4) 

18 Q l"(b"l(3"1"",-u-s-c-§-1-2 (-c-EA_l_(-bl-(4-I --- 18 

19 (b)(3)7USC §12(CEA) (b)(4) 19 

20 (b)(3J7Y,~.,C§12 ? 20 

21 A fb)(3) 7 USC ~12 (CEA) (b)(4) 21 

22 (b)(3) 7 USC §12 (CEA) (b)(4) 22 Q b)(4) 

23 23 b)(4) ? 

b)(4) 24 24 A 

25 ~--M=s~. -R~Y-A~L~L-,-C~a_n_w_e_m_a~rk-t~h.,...1s as (b)(4) 25 

Page 186 Page 188 

1 Nowak 1 Nowak 

2 the next exhibit, Exhibit 9. 2 Q I'm going to hand you what has 

3 (E-mail was marked as 3 been marked Exhibit 9. 

4 Commission's Exhibit 9 for 4 A Okay. What was the date of the 

5 identification, as of this date.) 5 previous e-mail we just looked at? 

6 MS. RY ALL: Let's go off the 6 Q August 28th of 2009. 

7 record. 7 A I'm just trying to put that in 

8 (Whereupon, a recess was taken.) 8 context with that. 

9 MS. RY ALL: Back on the record. 9 Q Here's Exhibit 8. 

10 Q I want to backtrack for a 10 A This is the 28th, and this is 

11 minute. 11 February 5th. Okay, thank you. 

12 A Okay. 12 Q Did you have a chance to read 

13 Q K-lb-)(4-1~--------~I 13 through that e-mail? 

14 (b)(4) 14 A I'm looking right now. 

15 15 MR. SCHROEDER: This is 9 you 

16 said? 16 17 \,,.,,~-----------~ ,(bl(4I I? 17 MS. RYALL: Yes. 

18 A (b)(4 I 18 A Okay. 

(b)(4) 19 Q I 19 Q This is a one-page exhibit, and 

20 (b)(4) I 20 it's an e-mail exchange dated February 5, 

21 (b)(4) I? 21 2010. The Bates number is JPM-AG 00177274, 

22 A bl(41 I 22 and you have had a chance to read this? 

23 __ ,;:o'---_.(_bI_(4I _________ .,_1~ 23 A Yes. 

24 (b)(4) 24 Q ~b")(3,ii)',7-U7

S7C-§"l02-(C7EA_)_(_b)"(4') ---

25 b)(3) 7 USC §12 (CEA) (b)(4) 25 I 

~--------------~ 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 185-188 
Page 189 Page 191 

1 Nowak Nowak 

2fbJ(3)7USC §12(CEA) (b)(4) 2 read over that? 

3 A b)f3t7 3 A Yes ,,.,,-~------~ 4 Q b)(4) 4 Q This e-mail {bl(4l I 

5 (b)(4) 5 (b)(4) I 

6 (b)(4) ? 6 l(b)(4) Kb)(7)(C) '· 7 A (b)(4) 7 A b)(4) I 

8 Q ~b~)(4~)---------\ 8 Q b)(4) I 

g b)(4) 9 b)(4) 

10 10 

(b)(4) 11 11 r 

12 (b)(4) 12 A ~b)(4) I 

fb)(4) 13 A ~b)(4) I 13 Q I 

14 l(b)(4) I 14 (b)(4) I? 

15 (b)(4) 15 A KbJ(4) I I 

16 Q KbJ(4) I? 16 b)(4) 

17 A Kb)(4) I 17 

18 (b)(4) 18 

19 19 

20 20 

21 21 (b)(4) Kb)(7)(C) l(b)(4) I 

22 22 (b)(4) 

23 23 I 

(b)(4) 24 24 li(b)(7J(ci 

25 Q So 1n the top e-mail from l(bJ(7J(CJ 25 l(b)(7)(C) i!(b)(4) 

Page 190 Page 192 

1 Nowak 1 Nowak 

2 l(b)(7)(C) lfbJ(3) 7 USC §12 (CEA) (b)(4) 2 b)(4) 

3 (b)(3) 7 USC §12 (CEA) (b)(4) 3 

4 4 

5 5 

6 l,(b~)(~3)~7~U~s~c=§1~,~(C~E~A~) (~b)~(,~) ------~ P.~ Q b)(4) 

7 A fbl(3) 7 USC §12 (CEA) (b)(4) I 6 

7 (b)(4) 

8 (b)(3) 7 USC §12 (CEA) (b)(4) 8 I 

b)(4) I 9 9 A 

b)(4) 10 10 Q ? 

b)(4) 11 11 A I 

(b)(4) 12 MS. RY ALL: We will mark this as 12 

13 No. 10, please. 13 

14 (E-mail was marked as 14 

15 Commission's Exhibit 10 b)(4) for 15 (b)(7)(C 

16 identification, as of this date.) 16 (b)(7)(C) ~b)(4) I 

(b)(4) 17 0 I am handing you Exhibit 10, if 17 

18 you can take a look through that. 18 

19 A Okay. 19 

20 O This is a one-page exhibit dated 20 

21 January 4, 2010. It's an e-mail from you to 21 

22 a group of people at J.P. Morgan, and the 22 ~ .... o:;...___,..:N:_o::.w... , .... t .... h .... ,s .... e::.-.... m .... a::.1I"1(=bl=(3=1 '-u-s-c-§-' ',_I_~ 

23 Bates number at the bottom right-hand corner 23 (b)(3) 7 USC §12 (CEA) (b)(4) 

24 is JPM-AG 00168975. 24 

25 And you have had a chance to 25 ~--------------~ 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 189 - 1 92 
Page 193 Page 195 

1 Nowak Nowak 

ITTl3il 2 A 2 Q Is that something f~l,(7) !would be 

KbJ(3) 7 USC §12 (CEA) (b)(4) 3 Q I 3 able to talk about? 

b)(3) 7 USC §12 (CEA) (b)(4) 4 4 A f5R4il 

5 5 EXAMINJrnON BY MR. HAYECK: 

6 6 Q fb)(4) I 

7 \~1~3)7,~,~c §12 r7 7 fb1(4) I 

8 A ~~1\~/7USC §12(CEA) I 8 Vb1(4) r 

9 (b)(3) 7 USC §12 (CEA) (b)(4) 9 A 

10 10 Q fb)(4) 

11 11 fbl(4) 

12 12 A KbJ(4) I 

13 b)(4) 13 

14 14 

15 15 

16 16 

17 17 

Q l(b)(3) 7 USC §12 (CEA) (b)(4) 18 18 

(b)(3) 7 USC §12 (CEA) (b)(4) 19 ~ 19 

20 A (b)(3) 7 USC §12 (CEA) (b)(4) I 20 

Q Kb)(3) 7 USC §12 (CEA) (b)(4) I 21 21 

(b)(3) 7 USC §12 (CEA) (b)(4) 22 22 I 

(b)(3) 7 USC §12 (CEA) (b)(4) 23 23 

24 A KbJ(3) 7 USC §12 (CEA) (b)(4) " I 24 MR. HA YECK: Thank you. 

25 (b)(3) 7 USC §12 (CEA) (b)(4) 25 MS. RY ALL: I think we are up to I 

Page 194 Page 196 

1 Nowak 1 Nowak 

2 (b)(3) 7 USC ~12 (CEA) (b)(4) l(b)(7)(C 2 No. 11. Let's mark this as No. 11. 

3 (b)(3) 7 USC §12 (CEA) (b)(4) 3 (Document was marked as 

4 4 Commission's Exhibit 11 for 

5 5 identification, as of this date.) 

6 Q I am handing you Exhibit 11, if 6'----~--~--------J 7 Q l(b)(3) 7 USC §12 (CEA) (b)(4) 7 you can take a look through that. 

8 (b)(3) 7 USC §12 (CEA) (b)(4) I 8 A Okay. 

9 (b)(3) 7 USC §12 (CEA) (b)(4) I? 9 Q This is a one-page exhibit. 

10 A l(b)(3)7USC§12(CEA)(b)(4) I 10 It's an e-mail fromcl(b:cllc.:71c.clC:cl _____ ~ 

11 i(b)(3 I? 11 to you dated November 3, 2008. The bottom -

(b)(3)7USC §12(CEA) 12 Q Ck ,en I 12 right-hand corner has the Bates number 

13 A (b)(3) 7 USC §12 (CEA) (b)(4) I 13 JPM-AG 00244311. And you have had a chance 

14 (b)(3) 7 USC §12 (CEA) (b)(4) 14 to read through this? 

15 15 A 0Y~e~s~·--------- 16 _ _,o,___,_Kb_11_,1 _________ .,__1_ 16 

17 17 (b)(4) 

18 18 

19 19 

20 l(b)(3) 7 USC §12 (CEA) (b)(4) I 20 ' 

21 (b)(3) 7 USC §12 (CEA) (b)(4) 21 

22 ~b=)(4aa)---------.=lb1=)(7=)("'1'(hib)"(4)c----'-7 1 22 

23 23 l(b)(4) I 

24 (b)(3)7USC §12 I? 24 kb)(4) I? cr-rh> ck,cn · 

25 A fb1131 I 25 A KLb~)(~41 ________ ~1 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 193-196 
Page197 Page 199 

1 Nowak Nowak 

2 (b)(4) 2 Q b)(4) 

(b)(4) 3 I 3 ? 

(b)(4) I? (b)(4) 4 Q I . 4 A 

5 A l(b)(4) 5 (b)(4) I 

(b)(4) 6 Q I 6 

Ub)(4) I 7 

8 (b)(4) 1? 8 

fb)(4) 9 A I 9 

10 (b)(4) 10 

11 11 

12 12 

13 Q l(b)(4) I 13 

14 ~? 14 

15 A ~b)(4) I 15 Q l(b)(4) 

16 (b)(4) 16 f{b)(4) 

17 17 !(b)(4) I? 

18 18 A b)(4) 

19 19 (b)(4) 

20 20 

21 21 

22 22 

(b)(4) 23 Q I? 23 

24 A b)(4) I 24 

(b)(4) 25 Q 25 

Page 198 Page 200 

1 Nowak 1 Nowak 

2 l(b)(4) b)(4) I? 2 

b)(4) 3 A 3 

4 (b)(4) 4 

5 Q (b)(4) ? 5 

6 A (b)(4) 6 

7 (b)(4) 7 

8 8 

b)(4) 9 Q 9 

(b)(4) 10 Mr. 10 

11 (b)(?)(C) ? 11 

12 A 12 

13 (b)(4) 13 

14 14 

15 Q Where is that? 15 

b)(4) 16 A 16 

17 (b)(?) (b)(4) 17 

18 (b)(4) 18 

19 19 

b)(4) 20 Q 20 

21 (b)(4) 21 

22 A b)(4) 22 Q ~b)(4) 

Q 23 b)(4) 23 b)(4) ? 

24 (b)(4) ? 24 A Kb)(4) I 

25 b)(4) 25 (b)(4) 

1 I 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 197 - 200 
Page 201 Page 203 

1 Nowak Nowak 

(b)(4) 2 

3 

Hb)(4) 

4 

5 b)(4) fE](7)(fb)(4) I 5 MS. RY ALL: Let's mark this as 

6 (b)(4) 6 number 12. 

7 7 (E-mail string was marked as 

8 8 Commission's Exhibit 12 for 

9 9 identification, as of this date.) 

10 1 0 O I am handing you Exhibit 12, if 

11 11 you can take a look at that. 

12 12 A Okay. 

13 13 Q Are you ready? 

14 14 A Yes. 

15 15 0 This is a one-page exhibit. 

16 16 It's an e-mail chain, and the top is from 

17 17 you, Michael Nowak, dated August 5, 2009, to 

18 18 l(bJ(7J(CJ I. The bottom right-hand 

19 19 corner is the Bates number JPM-AG 00267490. 

20 20 At the bottom~rites an e-mail to (bJ(7J(CJ 

21 Q fb)(4) I 21 l(bJ(7J(CJ land you saying, ~1~31,7,~,~~ §12 

fb)(4) 22 I 22 b)(3) 7 USC §12 (CEA) (b)(4) 

23 Kbl(4) (? 23 

24 A fb1(4) 24 

25 l(b)(4) 25~--------------~ 

Page 202 Page 204 

1 

2 b)(4) 

Nowak 1 Nowak --,.-'-, 2 )~)~3)7,~,~:=: §12 I? 

3 3 A b)(4) I 

4 

5 Q b)(4) r 

4 

5 

Q 

A 

~b~)(4~)---~---~[!. 

~b-)(4_) _____ 1_~ 

6 A b)(4) I 6 Q eb~)(~4)----'-----~, 

7 Q b)(4) I 7fb)(4) I~ 

8 (b)(4) I! 8 fb1(4) V 

9 A Kbl(4) I 9 A Kb)(4) 

10 Q KbJ(4) I 10 b)(4) 

11 (b)(4) I 11 

12 A Kb)(4) I 12 

13 (b)(4) 13 

14 14 

15 15 

16 u b)(4) I. 16 

17 A (b)(4) I 17 

18 Q (b)(4) 18 

19 (b)(4) 

20 A 

(? 

b)(4) I 

19 

20 

b)(4) 

b)(4l l\~),(7lKb)(4) 

1\~lf7Jj(b)(4) 

I 

I 

21 Q (b)(4) I 21 b)(4) 

22 (b)(4) I? 22 

23 A (b)(4) I 23 u KbJ(4) 

24 l(b)(4) I 24 (b)(4) 

25 Kbl(4) I 25 1(b)(4) e 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 201 - 204 
Page 205 Page 207 

1 Nowak Nowak 

2 A fb)(4I I 2 A That's cfb~)(~7)~(C~) __ J 

3 (b)(4) 3 Q You're just gold? 

4 4 A Yes. 

5 5 Q The rest of your testimony will 

6 6 be interpreting documents. 7 ~--;Q:;-------a,(bs,)(4'7) ==========I,---' 7 A You're going to hear a lot of my 8 (b)(4) I 8 terrible sense of humor. 

g (b)(4) 9 EXAMINATION BY MR. HAYECK: 

~b)(4) " 10 A I 10 Q fb)(4) jl!iill!]i~b-)(4_1 ___ J 

11 (b)(4) 11 b)(4) ? I 

12 i(b)(4) 12 A tb)(4 1 

13 Q ~b~)(4~)--------~ 13 i(b)(4) 

14 Q (b)(4) 14 l(b)(4) I? 

15 !(b)(4) 15 A fb)(4) 

b)(4) 16 A 16 ~b)(4) 

17 f{b)(4) 17 _b)(4) 

18 j{bl(4) 18 Q b)(4) 

19 (b)(4) 19 j(b)(4) l(bl( I b)(4) 

20 (b)(4) 20 A Or(bJ(7 bJ(4J 

21 21 (b)(4) 

22 (b)(4) 22 

23 23 MS. RYALL: Can you mark this as 

24 24 number 13, please. 

25 (E-mail string was marked as 25 ~--------------~ 

Page 206 Page 208 

1 Nowak 1 Nowak 

(b)(4) 2 2 Commission's Exhibit 13 for 

3 3 identification, as of this date.) 

4 4 THE WITNESS: Okay. 

5 5 EXAMINATION BY MS. RYALL: 

6 6 Q This is a four-page exhibit. 

7 7 It's a chain of e-mails. At the very top of 

(b)(4) l(b)(tbl(4) 8 I 8 the first page is from l(bJ(7J(CJ ~ dated 

9 (b)(4) 9 August 26, 2009, to Michael Nowak. The 

10 10 bottom right-hand side, JPM-AG 00268407. 

11 11 This is dated August, 2009, as was 

12 12 Exhibit 8, 1(bJ(3J 7 us c §12 (CEAJ (bJ(4l I 

l(b)(4) (b)(3) 7 USC §12 (CEA) (b)(4) 13 Q I 13 

14 (b)(4) 11 14 

15 A KbJ(4) I 15 

16 O You don't do silver options 16 

17 either? 17 

18 A No. That's what~Kb~l(7~1(~CI~--~ 18 

A l(b)(3) 7 USC §12 (CEA) (b)(4) 19 does. He has been doing it for a Ion time. 19 I 

20 He also inherited silver s at. (bl(4l 20 b)(3) 7 USC §12 (CEA) (b)(4) 

21 (b)(4) 21 

22 Q What do you focus on now then 22 

23 yourself, gold? 23 

24 A Gold options, yes. 24 

25 Q Platinum and palladium? 25 Q Do you recall that actually 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 205 - 208 
1 

Page 209 Page 211 

Nowak Nowak ==------ _I _______ -J 

3 j{b)(4) I? 

2 being the case,L(b_l(4 2 =-'Q~~f_bl(_41 _______ -"-, 

Hb)(4) 

~b)(4) 4 A I 

5 (b)(4) 

6 6 b)(4) ? 

7 7 A b)(4) (b)(7) (b)(4) 

8 8 b)(4) 

9 Q Kb)(3) 7 USC §12 (CEA) (b)(4) 9 EXAMINATION BY MR HAYECK: 

(b)(3) 7 USC §12 (CEA) (b)(4) 10 Q Who isl\bl(7J(C[l(bJ(7J(CJ t 10 I

=='- (bJ(7J(Clp 

11 11 A bJ(4l I 

12 \~l£3J,7Y,~.,c §121(bJ(7J(CJ [b)£3l!~~,s_:,,., I 12 Q b)(4) 1? 

~~ rb)(3)7USC §12(CEA) (b)(4) 13 A b)(4) I 

14 I(b)(4) Jb)(7)(C) I 

15 And then at the verv ton KbJ(7J(CJ I 15 Q Where 1sl(bJ(7J(CJ l(b)(4) 

16 (b)(7)(Cfb)(4) 16 l(b)(4) I I? 

17 (b)(4) 11(b)(7)q(b)(4) I 17 A He is more senior to me. He 

18 (bl(4l I 18 runs a whole bunch of different sales 

19 Do you recall receiving this 19 businesses to index business and the ags 

20 e-mail from Mr. \bl(7J(C . 20 business. 

21 A b)(4) 21 Q Where would he be with respect 

22 (b)(4) 22 to j{bl(71(CI I? 

23 Q Do you recall having a 23 A fbI(4) fb1(7)(C) 1. 

24 discussion with Mr.."(b'scl("71'ii(c7;,;.b;;,1(4:,:I=-----~ 24 Q Who is (bJ(7J(CJ ? 

25 (b)(4) b)(7) b)(4) 25 A He is the head of risk 

Page 210 Page 212 

1 Nowak 1 Nowak 

2 ~l(b~)(4") --~I? 2 management. bJ(4l 

3 A j{b)(4) 3 (b)(7)(C) 

Q Mr. b)(7)(C) ·s~(b")(4") ____ _ 4 j{b)(4) 4 

5 Q i(b)(4) 5 b)(4) 

6 I(b)(4) 6 What is that? 

7 A fb)(4) I 7 A Those would be (bJ(7J(CJ 's ~ 

~ (b)(4) I 8 fbI(4) I 

9 Q It would include Mr. fbl(7J(CJ 10~(b~)(~7)Th11,(hlb)"(4')------------'--, 1 O and Mr . f'bJ(7J(CJ I? 

11 (b)(4) 1 1 A b)(4) I 

b)(4) 12 12 Q r 

b)(4) 13 13 A I 

14 14 b)(4) 11(b)(7)(C) tbl(4) I 

b)(4) 15 15 Kb)(7)(C) l(b)(4) I 

16 16 (b)(4) II(b)(7)(C) 1b)(4) I 17~~Q~"j(~b)(~4)~--------~I~ b)(4) b)(7)(C) 17 lrbl/41 I 

18~ 18 b)(4) (b)(7)(C) 1j(b)(4) I 

19 A b)(4l 19 b)(4) 

20 (b)(4) 20 

21 21 

22 22 

23 23 u KbJ(7)(C) I is also c.c.'d. 

24 24 Who is he? 

25 ~--------------~ 25 A b)(4) 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 209 - 212 
1 

Page 213 Page 215 

Nowak Nowak 

2 ~(b")(4")-------------~ 2 EXAMINATION BY MR. HAYECK: 

3 

4 

5c__~=-------~__J 

6 0 fbl(4I I 

7~?~--------~ 

8 A i(b)(4) 

9 l(b)(4) I 

10 0 How about (bl(7J(CJ ? 

11 A b)(4) 

12 (b)(4) 

13 ~~-~-~~-~~~---~ 14 O If you look a little further 

15 down it names (bl(7J(CJ (bl(4l 

16 (b)(4) 

17 A Okay, I see that. 

18 Q !(b)(4) 

19 l(bl(4I I? 

20 A ~b)(4) I 

21 (b)(4) 

22 

23L_~-~---------~ 

24 Q Sure. 

25 A (b)(4) 

~-----------~ 

Page 214 

1 Nowak 

~ l(b)(4) 

6 Q IL(b~l(7~1(~C~I ---~L what does he 

7 do? 

8 A He runs hedge fund sales. 

9 Q l(b)(7)(C) I? 

1 O A Never heard of her. And same 

11 withl(bl(7J(CJ I, I'm not familiar with him 

12 either. 

13 MR. HAYECK: Thank you. 

14 EXAMINATION BY MS. RYALL: 

15 Q (b)(41 I 

16 l(b)(7)(C) 

b)(4) 17 A 

18 0 (b)(4) r 

19 A i(b)(7)(Clf. 

20 0 i(b)(4) 

21 fb1(4) 

22 A He isfbJ(7J(CJ I. so it's only in 

23 the last month he has been my manager. 

24 Q Who was before? 

25 A tb)(7)(C) I. 

3 Q What does l{bJ(7J(CJ I do now? 

fb)(4) 4 A I 

5 (b)(4) 

6 

7 

8 

9 (b)(4) l(b)(7)(C I 

(b)(7)(C) (b)(4) 10 1 I 

b)(4) 11 Q I? 

12 A b)(4) I 

13 b)(4) I 

b)(4) 14 IKb)(7)(C) ~b)(4) I 

b)(4) 15 I 

16 (b)(4) 1(b)(7)(C) i(b)(4) l 

17 (b)(4) 

18 

(b)(4) l\?)(7)( ~b)(4) 19 I 

20 EXAMINATION BY MS. RYALL: 

21 0 You said he was aU~~-I(7-)(c-i-p. 

22 A Yes. 

23 0 Then you brought on another 

24 trader that was atl(bJ(7J(CJ I? 

25 A Yes. 

Page 216 

1 Nowak 

2 Q You guys didn't take them over? 

3 A Yes. 

4 Q You did? 

5 A Yes. 

6 MS. RYALL: Can we mark this as 

7 number 14. 

8 (Instant message exchange was 

9 marked as Commission's Exhibit 14 for 

10 identification, as of this date.) 

11 Q This is a short one. Just take 

12 a look at this. This is marked as Exhibit 

13 14. It's a one-page instant message 

14 transcript, Bates stamped number JPM-AG 

15 00273963. 

16 A Okay. 

17 Q This is an instant message from 

18 bJ(7J(CJ to you on November 19, 2009. Who is 

19 (b)(7)(C) ? 

20 A bJ(7J(CJ reports to (bl(7J(C 

21 bJ(7J(CJ , and he is in risk management. 

22 Q He'ssayingl(bJ(3J1usc §12(CEAJ I 

23 b)(3) 7 USC §12 (CEA) (b)(4) 

24 

25~-------------~ 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 213- 216 
Page 217 Page 219 

1 Nowak 

2 !(b)(4) I 

3 (b)(4) 1(b)(?)(C) 1(b)(4) I 

4 (b)(4) 

5 

6 le'S'sa=a=-------,------~ 7 (b)(4) I? 

8 A fbl(41 I 

9 0 Can you interpret for me what he 

1 O meansKbl(4l I? 

11 A l(bl(41 I 

12 (b)(4) 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22~----------------~ 

23 0 What does he normally do? 

24 A fb1(4) 

25 ~~(b~)(7~)(~C~)---i~(b~)(4M)-----~----, 

Page 21 B 

1 Nowak 

(b)(4) 2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

(b)(4) 17 l(b)(?)([ 

18 (b)(4) 

(b)(4) 19 Kb)(?)( I 

(b)(4) 20 

21 

22 

23 

24 EXAMINATION BY MR. SMITH: 

25 0 Did you ever discuss this 

Nowak 

2 instant message with~ 

3 A fb1(41 i rb)(4) 

7 MR. HAYECK: Let's take a quick 

8 break. 

9 (Whereupon, a recess was taken.) 

to MS. RY ALL: Back on the record. 

11 Let's mark this as Exhibit 15, please. 

12 (Instant message exchange was 

13 marked as Commission's Exhibit 15 for 

14 identification, as of this date.) 

15 0 I have handed you Exhibit 15, 

16 which is an eight-page exhibit. The bottom 

17 right-hand corner has the Bates number 

18 JPM-AG 00271867. Do you recognize what this 

19 is? 

20 A It's an instant message 

21 conversation betw n me and f:bJ(?J(cl, and I 

22 guess (bJ(?J(C and bJ(?J(CJ are on it, too. 

23 Q b)(?)(C) 

24 A fcebsal(7"'1(c"'1--a=I~' yes. 

25 0 I'm going to direct your 

Page 220 

t Nowak 

2 attention to the page Bates ending 870, the 

3 last three lines. 

4 A Okay. 

5 ="Q~~fb_)(4_1 _____ ~ __ __, 

6 rb)(4) 

7 Could you explain to me what 

8 that discussion is about? 

9 =.cA-'--""b .. )(4 ... 1 ________ _,_, __ ----, 

10 b)(4) 

1 1 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 ~-------------~ 

24 0 Next I would like to take a look 

25 at the very bottom of the page ending 872, 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 217 - 220 
Page 221 

1 Nowak 

2 the very last line, and the next five lines 

3 on the following page. 

4 A Let me read back a little bit so 

5 I can get some content. This isl(bJ(7J(CJ I 

6 talking to f:bl(7J(q, right? 

7 0 Yes. 

8 A Okay, yes. 

9 0 One of the lines that I 

10 highlighted to you, do you understand what 

11 Mr. ~bJ(7J(CJ I is savinq? 

12 A fb)(4) I 

13 (b)(4) 

14 

15 (b)(4) (b)(4) I "' 16 (b)(4) I 

17 (b)(4) l~b)(7)(C)fb)(4) I 

18 (b)(4) 

19 

20 

21 

22 

23 

24 

25 

Page 222 

1 Nowak 

2 (b)(4) 

3 

4 

5 

6 

7 l(b)(4) 0 I 

8 (b)(4) 17 

9 fb)(4) A I 

10 (b)(4) 

11 

12 

13 

14 

15 

16 0 fb)(4) I 

17 (b)(4) IKb)(7)(C I(b)(4) I 

18 (b)(4) 

19 

20 

21 

22 (b)(4) 

23 A fb)(4) " I 

24 EXAMINATION BY MR. HAYECK: 

25 Q If I direct your attention to 

Page 223 

Nowak 

2 the first page of the exhibit. 

3 A Okay. 

4 Q Bates stamp ending 1867. 

5 A Yes. 

6 Q There is an entry, six entries 

7 down that says, 'l~l(7l t:Jave me the hard sell 

8 in ON." 

9 A Okay. 

10 0 Who is ~bl(? 

11 A bJ(7J(CJ is the senior 

12 marketer in Singapore. He is kind of like 

13 the local senior guy in Singapore. 

14 Q Who does he report to? 

15 A b)(4) (b)(7)(C) (b)(4) 

b)(4) 16 

17 Q Does Mr. (bJ(7J(CJ (bJ(4l 

18 A fb1(4) I 

19 Q What does the quote DN mean? 

20 A That's a typo for LDN, so it 

21 should have been London. So I mean not that 

22 you asked me, but what that's referring to 

23 isf:bJ(7J(CJ ~as been trying, was bugging me to 

24 come to visit out in Singapore and see the 

25 guys on the desk, and I said, "I can't. I 

Page 224 

1 Nowak 

2 can't. fbl(7J(CJ I It's a pain in 

3 the butt to get out there." And when I met 

4 up withl(~l(7llhe gave me the hard sell, "You 

5 have to come out to Singapore." So that was 

6 me communicating to f:bJ(7J(CI thad2?)(7lqwas 

7 trying to get me to come out to Singapore to 

8 see you guys, too. 

9 Q Did you eventually go? 

10 A Yes. 

11 Q How long were you there? 

12 A Three days, which takes like 

13 seven days of travel time. 

14 Q About two-thirds down on the 

15 page, the seventh entry from the bottom, it 

16 appears that you say, "I just landed from 

17 London." Do you see that entry? 

18 A Yes. 

19 Q Then there is a phrase after 

20 that that I can't interpret. l(bl(4l I 

21 b)(4) 

b)(4) 22 A 

23 (b)(4) 

24 

25 '-~Q:,----,A~n-dcccM~r.'t~bl~l7~11C~l~l-re_s_p_o_nd~s-a~bo-u~ta 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 221 - 224 
Page 225 Page 227 

1 Nowak Nowak 

2 Subway around the corner. fbl(4l 2 make sure. 

3 (b)(4) ? ~----~ 3 l(b)(4) I 

4 A No. That's actually referring 4 Kb)(4) I 

5 to the comment when I am referring to 5 (b)(4) ll(b)(7)( t's 

(b)(4) 6 Singapore. I said, "You just need to find 6 

7 some food that I can eat over there," and he 7 

8 says, "There is a Subway right around the 8 

9 corner," because I was afraid of the food 9 

10 overthere. 10 

11 MR. RAISLER: As in Subway 11 

12 sandwich shop? 12 

13 THE WITNESS: Correct, Subway 13 

14 sandwich shop. 14 

15 0 In the last entry on the page 15 

16 where it just says your name and then it 16 

(b)(4) 17 goes over to the next page, where it says, 17 l!(bl(71(Ci's 

18 (b)(4) I 18 (b)(4) 

19 A b)(4I I 19 20 Q t,(b~)(~41----------,I 20 

21 ~(b~)("4)"-----'----~17'?------~ 21 

4 22 22 _;.A.:.___,f-•bl-(1---------='l- 23 (b)(4) 23 

N N 

25 ~------------~ 25 EXAMINATION BY MS. RYALL: 

Page 226 Page 228 

1 Nowak 1 Nowak 

(b)(4) 2 2 0 What is LME week? 

3 3 A London metals exchange week. 

4 4 And people kind of come in, there's a lot of 

5 5 different dinners, things like that. 

6 6 MR. RAISLER: Annual event, you 

7 7 shouldn't miss it. 

(b)(4) 8 0 I 8 THE WITNESS: It's the first one 

(b)(4) 9 I 9 I had been to, actually. 

(b)(4) 10 I? 10 EXAMINATION BY MR. HAYECK: 

(b)(4) 11 A I? 11 Q On the third page of Exhibit 15. 

(b)(4) 12 0 I 12 A 69? 

13 (b)(4) 1? 13 Q Yes, ending in 1869. The fifth 

14 A Kb)(4) I 14 entr down there is a reference to l(bJ(7J(CJ 

(b)(4) 15 (b)(7)(C) 15 

16 16 A Yes. 

17 17 Q Who is that? 

18 18 A bJ(7J(CJ , he is the other trader 

19 0 The fifth entry from the bottom 19 in Singapore with bJ(7J(CJ 

20 on the second page of Exhibit 15. 20 MR. HAYECK: Okay. 

21 A Okay. 21 EXAMINATION BY MS. RYALL: 

22 Q Mr. ~Kb~1r,~1r7cI~lappears to say, 22 Q How often do you go to the 

23 l(b)(4) 23 London office? 

24 Do you know what that means? 24 A Four times a year, ish. 

25 A Let me just read ahead of it to 25 MS. RYALL: This will be 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 225 - 228 
Page 229 Page 231 

1 Nowak Nowak 

2 Exhibit 16, please. 2 Kb)(4) I? 

fb)(4) 3 (E-mail was marked as 3 A I 

b)(4) 4 Commission's Exhibit 16 for 4 

5 identification, as of this date.) 5 

6 Q I am handing you Exhibit 16. 6 

7 It's a one-page exhibit, and the Bates 7 

8 number is JPM-AG 00242804. 8 

9 A Okay. 9 

10 0 Do you recognize what that is? 10 

Kb)(4) 11 A I 11 

12 (b)(4) b)(4) 12 Q I 

13 13 (b)(4) 1? 

14 (b)(l(b)(7)(C), ~b)(7)(C) l(b)(4) r~,"· ""'b)(4) 14 A b)(4) I I 

15 (b)(4) 15 Q b)(4) I 

16 I 16 t-b)(4) I? 

(b)(4) b)(4) 17 Q I I 17 A 

18 (b)(4) I? 18 (b)(4) 

~b)(4) 19 A I 19 

(b)(4) 20 ? 20 

Q b)(4) 21 21 

b)(4) Q b)(4) 22 A I 22 

23 (b)(4) I 23 l(b)(4) I 

Q (b)(4) 24 I 24 A 

Q b)(4) 25~ 25 ~ Page 230 Page 232 

1 Nowak Nowak 

2 A b)(4) I ; r)(4) (b)(3) 7 USC §12 (CEA) (b)(4) 3 Q I 

(b)(3) 7 USC §12 (CEA) (b)(4) 4 

5 5 

4 A 

Q ~ Can you explain that to me? 

6 6 A fb)(4) I 

7 (b)(3) 7 USC §12 (CEA) (b)(4) (b)(4) 1? 7 

~b)(4) 8 A I 8 

(b)(4) 9 9 

10 10 

11 11 

12 12 

b)(4) 13 13 Q ? 

b)(4) 14 14 A 

15 15 (b)(4) 

16 16 I 

17 17 Q The second e-mail from Mr. 

18 18 l(b)(7)(C) !says, "Nice day, Mike." 

19 19 A Yes. 

20 20 Q fb)(4) I? 

~fb")(4")--------~~ 21 21 A 

22 22 (b)(4) 

23 23 

24 24 "'=~-~----------~ 

25 Q Where in here does it say that 25 bJ(4l I I wrote on that, I'm sorry. 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 229 - 232 
Page 233 

1 Nowak 

2 0 On Exhibit 16 the underlining is 

3 your own from this session? 

4 A Yes. 

5 MS. RY ALL: Lei's mark this, 

6 please. 

7 (Instant message exchange was 

8 marked as Commission's Exhibit 17 for 

9 identification, as of this date.) 

10 THE WITNESS: Okay. 

11 0 I have handed you what's been 

12 marked as Exhibit 17, and it's an 11-page 

13 document. On the first page is the Bates 

14 number JPM-AG 00274576. 

15 Do you recognize this document? 

16 A Yes. It's an instant message 

17 with me,~, ~?N andl(bl(7J(CJI, 

18 Q (b)(7)(C) ? 

19 A Yes. 

20 0 ~l(b~)(-7)-(C-) -1? 

21 A Yes. 

22 Q And 1~rb=1r,=1r=c1---~I? 

23 A Yes. 

24 0 Do you recall having this actual 

25 conversation via instant message? 

Page 234 

1 Nowak 

2 A I sure do. 

3 O You do? 

4 A Yes, I remember this one, yes. 

5 0 On the first page, about seven 

6 lines down at 5:07:04, Mr.!(b1m1c1 Isa s, .~l( 

7 (b)(4) 

8 L(b_)(4_)_~~------

9 A Yes. 

10 0 Do you understand what he is 

11 saying there? 

12 A li5il4il 

13 Q (b)(4) I? 

14 A fbl(4) I 

15~(b-)(4_)_~------------L16 

17 

18 

19 

20 

21 L_~~=------------, 22=;0:__,f,•bl_(41 ___________ ~ 

23 !(b)(4) ! 

24 A fb1(41 

25 (b)(4) 

Page 235 

Nowak 

2 b)(4) 

3 

4 

fb)(4) 5 0 I 

6 b)(4) 

7 (b)(4) 8 r 

~b)(4) 9 A I 

10 b)(4) 

11 

12 

13 

14 0 Whatdoes,l\~/\~/1usc §12(CEAJ I 

15 (b)(3) 7 USC §12 (CEA) (b)(4) 1? 

~b)(3) 7 USC §12 (CEA) (b)(4) 16 A I 

17 b)(3) 7 USC §12 (CEA) (b)(4) 

18 (b)(3) 7 USC §12 (CEA) (b)(4) l~b)(7J(CI, 

(b)(3) 7 USC §12 (CEA) (b)(4) 19 

20 

21 

22 

23 

24 

25 

Page 236 

1 Nowak 

2 b)(3) 7 USC §12 (CEA) (b)(4) 

3 

5 

4 L----========~--~-~ 0 fb)(3) 7 us C §12 (CEA) (b)(4) I 

6 l\~l£3J,7Y,~.,c §12 I? 

7 A Yes, exactly. 

8 Q fb1(41 I Mr. Kb1(71(CI !(bl(41 

9 rb)(4) i 

10 Do you understand what he means 

11 there? 

12 A 

13 0 I? 

14 A 

15 b)(4) 

16 

17 

18 

19 

20 

21 

22 ~--------------- 23 EXAMINATION BY MR. HAYECK: 

24 Q You were in London when you had 

25 this conversation? 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 233 - 236 
1 Nowak 

2 A I had just landed in London from 

3 a flight from Singapore. 

4 a Do you know if these times on 

5 here are London times? 

6 A Yes, they are London times. 

7 a How did you access the instant 

8 message system in London? 

9 A My BlackBerry. 

10 EXAMINATION BY MS. RYALL: 

11 a Did you land around 5 a.m. 

12 London time? 

13 A Exactly. I was a mess. 

14 a You were coming straight from 

15 Singapore? 

16 A Yes. 

17 a If you'll go to the page ending 

18 4580. 

19 A Okay. 

20 a And if you can read just this 

21 one page over again to yourself. 

22 A Okay. 

23 a What is this conversation about? 

24 A b)(4) 

(b)(4) 25 

1 Nowak 

2 (b)(4) 

3 

4 

5 

6 

7 

8 

9 

10 fb)(4) [b)(7)(CKb)(4) J~)(7)fb)(4) 

11 (b)(4) 

12 

Page 237 

Page 238 

(b)(4) [~),(?) U(b)(4) 

(b)(4) l(b)(?)(C) (b)(4) 

13 

14 I 

(b)(4) 15 I 

(b)(4) 16 1\~lf?l l(bl( I 

17 (b)(4) p)(?)(C fb)(4) I 

18 (b)(4) \~),(?l l(b)(4 [ 

19 (b)(4) I 

20 EXAMINATION BY MR. SMITH: 

21 a 

22 A b)(?)(C) that is. 

23 EXAMINATION BY MS. RYALL: 

24 Q (b)(3) 7 USC §12 (CEA) (b)(4) 

Nowak 

2 l(b)(3) 7 USC §12 (CEA) (b)(4) 

3 What does that mean? 

~b)(3) 7 USC §12 (CEA) (b)(4) 4 A 

5 b)(3) 7 USC §12 (CEA) (b)(4) 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 l(b)(4) 

20 (b)(4) [~~)(7)11(b)(4) 

21 ~b)(7)(C)Jb)(4) 

22 !(b)(4) I 

(b)(4) 23 

b)(4) 24 b)(4) 

25 (b)(4) 

1 Nowak 

2 (b)(3) 7 USC §12 (CEA) (b)(4) 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

Page 239 

I 

I 

Page 240 

18 ~--========~--~- fbJ(3J?usc§12(cEAJ(bJ(4J - 0 1 

19 KbJ(3)7USC §12(CEA) (b)(4) I 

20 \~l£3J,7Y,~.,c §12 I? 

21 A Kb)(3)7USC§12(CEA)(b)(4) I 

22 (b)(3) 7 USC §12 (CEA) (b)(4) 

23 

24 

25 (b)(3) 7 USC §12 (CEA) (b)(4) 25 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 237 - 240 

I 
Page 241 Page 243 

1 Nowak Nowak 

2 (b)(3) 7 USC §12 (CEA) (b)(4) 2 (b)(4) 

3 3 

4 4 

5 5 

6 6 

7 7 

8 8 

9 9 

b)(3)7USC §12(CEA) 10 Q bl/41 I? 10 

11 A b)(3)7USC §12(CEA) 11 

12 Q \~l£3J,7Y,~.,c §12 t? 12 

b)(3)7USC §12 13 A cr>rh> ck,cn I 13 

14 Q (b)(3) 7 USC §12 (CEA) (b)(4) t? 14 ~-------------- 15 A b)(3) 7 USC §12 (CEA) (b)(4) I 15 0 If we go back to the third page 

16 (b)(3) 7 USC §12 (CEA) (b)(4) 16 of the exhibit, which ends in number 78. 

17 17 A Okay. 

18 18 Q At 5:31 :04. 

19 19 A Okay. 

20 20 Q Mr. "tb~l(7~1(~c1"f"'bl""(''I --------, What 

21 21 is that? 

22 A ~fb")(4")--------~ 22 

23 ~: l(b)(4) 24 

25 

Page 242 Page 244 

1 Nowak 1 Nowak 

2 b)(4) 1(b)(4) I 2 

3 Q (b)(4) I? 3 Q b)(4) 

4 A ~b")(4") ________ _.__,I 4 b)(4) 

5 (b)(4) 5 b)(4) 

6 6 0 And at 5:32:49 there is a 

7 7 reference to!:bJ(7J(CJ I. Do you who that is? 

8 8 A fb1(7)(C) 1 !(b1(7)(C) I, 

9 9 the guy in New York. 

10~E~X~A'M~IN~A~T=l~O'N~B~Y'M=R-_~HA'Y~E=c=K~:--~ 10 0 And towards the bottom of the 

11 0 Let's look at the following page 11 page at 5:41 :09 there is a reference to~ 

12 which ends in 81. 12 A Yes. 

13 A Okay. 13 0 Who is that? 

14 Q At5:57:14. 14 A ~b)(4) I 

15 A Okay. 15 (b)(4) 16 Q ~(b")(4")---------~ 16 I 

b)(4) 17 (b)(4) (b)(7)(C) (b)(4) 17 Q p 

18 (b)(4) 18 A b)(4) I 

19 A Yes. 19 fb)(4) I 

20 Q Who is (bl( ? 20 Q b)(4) 

21 A (b)(7)(C) 21 A b)(4) " I 

22 Q (b)(4) 22 Q b)(4) r1 

23 (b)(4) ? 23 A b)(4) 

24 A j{bl(41 24 r)(4) 

25 l(b)(4) 25 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 241 - 244 
Page 245 Page 247 

1 Nowak Nowak 

2 

3 

Q 

A 

(b)(4) ? -~--------'-, b)(4) 

2 (b)(4) 

3 

4 (b)(4) 4 

5~------------- 5 

6 0 Is it somebody you trade with 6 

7 often? 7 

8 A 

9 l(b)(4) 

fb1(41 I 8 

9 

1 O O On the following page, which 10 0 b)(4) 

11 ends in 79. 11 Kb)(4) 1? 

12 A Okay. 12 A ~b)(4) I 

13 0 5:42:41. 13 b)(4) 

14 

15 

A 

Q Okay. ~vb~)(4~)~-------~ 

14 

15 

16 l(b)(4) 16 0 fb)(4) I 

17 A Yes. 17 fb)(4) I' 

18 0 Do you know what that means? 18 A b)(4) I 

19 A ~-------

(b)(4) - 19 0 b)(4) 17 

20~ 20 A b)(4) I 

21 0 What does that do for vou? 21 EXAMINATION BY MR. HAYECK: 

22 A l(bl(4l I 22 Q fb)(4) 

23 (b)(4) 

24 

25 ~------------~ 

~~ r)(4) 

25 !(b)(4) t/ 

Page 246 Page 248 

1 ~---~N~o~w~a~k ______ ~ 2 (b)(4) 

t 

2 A 

Nowak 

fb)(4) I 

3 EXAMINATION BY MS. RYALL: 3 (b)(4) 

4 0 If you can go to the page ending 4 

5 584. 5 

6 A Okay. 6 

7 0 If you can read the first half 7 

8 of that page to yourself. 8 0 fb)(4) I 

9 A Okay. 9 (b)(4) 

1 O O What is this conversation about 10 

11 between vou and Mr. l(bJ(7J(CJ r? 11 (b)(4) r 

12 A fb)(3) 7 USC §12 (CEA) (b)(4) I 12 A fb)(4) I 

13 (b)(3) 7 USC §12 (CEA) (b)(4) 13 (b)(4) 

14 14 

15 15 

(b)(3) 7 USC §12 (CEA) (b)(4) 16 l(b)(7)(C)L 16 

(b)(3) 7 USC §12 (CEA) (b)(4) 17 17 

18 18 

19 19 

20 20 

21 21 0 fb)(4) I 

22 22 (b)(4) 

23 23 

24 24 

25 25 (b)(4) I? 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 245 - 248 
Page 249 Page 251 

1 Nowak 1 Nowak 

2 A fb)(4) 2 fb1(4) I 

3 (b)(4) 3 MS. RYALL: Are there any more 

4 4 questions on this? 

5 5 MR. HAYECK: No. 

fb)(4) 6 Q I Mr. 6 MS. RYALL: I think we will end 

7 (b)(7)(C) 1(b)(4) I 7 there for today. 8 (b)(4) I 8 (Time noted: 4:35 p.m.) 

g (b)(4) I? 9 

l(b)(4) 10 A to 

11 (b)(4) I' t t 

12 Q l(b)(4) I 12 

13 A KbJ(4) I 13 

14 (b)(4) 14 

15 15 

16 16 

17 17 ~-------------~ 

18 EXAMINATION BY MS. RYALL: 18 

19 0 A couple of lines down it says, 19 

20 (bJ(4J What does 20 

21 that mean? 21 

=~--------~ 22 A fb)(4) I 22 

23 (b)(4) 1Kb)(7 l's l(b)(4) I 23 

24 (b)(4) l(b)( l's Kb)(4) I 24 

25 (b)(4) I !?2\7fb)(41 I 25 

Page 250 Page 252 

1 =~---~N~o~w~a~k _______ ~ 

2 (b)(4) 2 ACKNOWLEDGMENT 

3 3 4 UNITED STATES OF AMERICA} 

4 \~/ li(b)( I'S fbl(4) I ss: 

5 (b)(4) I 5 COMMODITY FUTURES TRADING COMMISSION) 

6 Q At the very to of that a e 6 

(b)(4) b)(7)(C) (b)(4) 7 I, MICHAEL NOWAK, hereby certify 7 

8 that I have read the transcript of my (b)(4) 8 9 testimony taken under oath in my deposition 

9 A Yes. 1 O of AUGUST 3, 2010: that the transcript is a 

10 Q What does l(bJ(4J I mean? 11 true, complete and correct record of what 

11 A fb)(4) I 12 was asked, answered and said during this 

13 deposition, and that the answers on the 12 (b)(4) 

14 record as given by me are true and correct. 13 15 

14 16 

15 MICHAEL NOWAK 

16 17 

Subscribed and sworn to 17 

18 before me this __ day 18 of , 2010. 

Q (b)(4) 19 I 19 

20 (b)(4) I? 

21 A b)(4) I 20 NOTARY PUBLIC 

(b)(4) 21 22 Q I? 

b)(4) 22 23 A I 23 24 (b)(4) 24 

25 I 25 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 Pages 249 - 252 
Page 253 

1 

2 INDEX 

3 WITNESS EXAMINATION BY PAGE 

4 MICHAEL NOWAK MS. RYALL 3 

5 

6 EXHIBITS 

7 COMMISSION'S EXHIBITS 

FOR IDENTIFICATION PAGE 

B 

1 Privacy Act 3 

9 2 Diagram 25 

3 Diagram 31 

10 4 Diagram 33 

5 Three-page document 96 

11 6 Letter 140 

7 E-mail 160 

12 B E-main chain 180 

9 E-mail 186 

13 10 E-mail 190 

11 Document 196 

14 12 E-mail chain 203 

13 E-mail chain 207 

15 14 Instant message exchange 216 

15 Instant message exchange 219 

16 16 E-mail 229 

17 Instant message exchange 233 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Page 254 

2 CERTIFICATE 

3 STATE OF NEW YORK) 

ss: 

4 COUNTY OF NASSAU) 

5 

6 I, KEVIN JONES, a Shorthand Reporter 

7 and Notary Public in and for the State of 

8 New York, do hereby certify: 

9 That the testimony of MICHAEL NOWAK was 

1 0 held before me at the aforesaid time and 

11 place. 

12 That said witness was duly sworn before 

13 the commencement of the testimony and that 

14 the testimony was taken stenographically by 

15 me and is a true and accurate transcription 

16 of my stenographic notes. 

17 I further certify that I am not related 

18 to any of the parties to the action by blood 

19 or marriage and that I am in no way 

20 interested in the outcome of this matter. 

21 IN WITNESS WHEREOF, I have hereunto set 

22 my hand this 11th day of August, 2010. 

23 

24 

25 KEVIN JONES 

[8/3/2010 10:04 AM] Nowak, Michael Vol 1 

Page 255 

1 

2 

3 ERRATA SHEET 

4 DEPOSITION OF: MICHAEL NOWAK 

RE: SILVER PRICES 

5 DATE TAKEN: AUGUST 3,2010 

6 PAGE LINE CORRECTION REASON 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 MICHAEL NOWAK 

21 Subscribed and sworn to 

before me this __ day 

22 of ______ ,2010. 

23 

24 NOTARY PUBLIC 

25 

Pages 253 - 255 
Transcript Word Index 

b)(4) (b)(6) (b)(7)(C) 

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[8/3/2010 10:04 AM] Nowak, Michael Vol 1 
Silver Price Manipulation 

Nowak, Michael Vol 2 

8/4/2010 10:00 AM 
Page 256 Page 258 

----------------------------------------X 

IN THE MATTER OF: 

SILVER PRICES 

-----------------------------------------X 

140 Broadway 

New York, New York 

August 4, 201 0 

10:00 a.m. 

CONTINUED DEPOSITION of MICHAEL 

NOWAK, the Witness herein, taken by the 

COMMODITY FUTURES TRADING COMMISSION, 

pursuant to Agreement, held at the 

above-noted time and place, before a Notary 

Public of the State of New York. 

Page 257 

1 

2 

3 APPEARANCES 

4 

5 COMMODITY FUTURES TRADING COMMISSION 

Division of Enforcement 

6 115521stStreetN.W. 

Washington, O.C. 20581 

7 

BY: CHRISTINE M. RYALL, ESQ. 

B EUGENE SMITH, ESQ. 

PAUL G. HA YECK, ESQ. 

9 

1 D 

11 SULLIVAN & CROMWELL, LLP 

Attorneys for Michael Nowak 

12 125 Broad Street 

New York, New York 10004 

13 

BY: KENNETH M. RAISLER. ESQ. 

14 WILLIAM SCHROEDER. ESQ. 

CHERYL WONG, ESQ. 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 

Nowak 

2 MS. RYALL: We are going to 

3 continue with reviewing e-mails today. 

4 THE WITNESS: Sounds good. 

5 MS. RYALL: And IM's. Lei's 

6 start with this one. 

7 (Instant message exchange was 

8 marked as Commission's Exhibit 18 for 

9 identification, as of this date.) 

10 M I C H A E L N O W A K, 1he Wi1ness 

11 herein, having been first duly sworn by 

12 Kevin B. Jones, a Notary Public in and 

13 for the State of New York, was examined 

14 and testified as follows: 

15 CONTINUED EXAMINATION BY 

16 MS. RYALL: 

17 Q Would you state your name again 

18 for the record. 

19 A Michael Nowak, N-0-W-A-K. 

20 Q Take a look 1hrough 1ha1. Take 

21 your time. 

22 MR. RAISLER: Jus1 for the 

23 record, did you note on the record when 

24 Mr. Nakkab left? And he is not with us 

25 today. 

1 

2 

Nowak 

MR. HA YECK: Why don't we go 

Page 259 

3 around and have appearances for today. 

4 For the witness we have? 

5 MR. RAISLER: Ken Raisler with 

6 Sullivan & Cromwell. 

7 MR. SCHROEDER: William 

8 Schroeder with Sullivan & Cromwell. 

9 MS. WONG: Cheryl Wong, 

1 O Sullivan & Cromwell. 

11 MS. RYALL: Christine Ryall. 

12 MR. SMITH: Eugene Smith. 

13 MR. HAYECK: And Paul Hayeck. 

14 THE WITNESS: So read through 

15 this? 

16 MS. RYALL: Yes, read through 

17 that 

18 For the record it's a seven-page 

19 exhibit, and the first page has the 

20 Bates number JPM-AG 00123038. 

21 THE WITNESS: Okay. 

22 Q Do you recognize this document? 

23 A I don't remember this specific 

24 conversation, but I know what it is. It's a 

25 Bloomberg conversation between me and t:bJ(7J(CJ I 

Pages 256 - 259 
Page 260 Page 262 

1 Nowak 

2 (b)(7)( 

3 Q (b)(7)(C) is 

4 your user name for Bloomberg IM's? 

5 A Correct. 

6 0 I want to first direct your 

7 attention to on the first page line time 

8 12:04:33. 

9 A Okay. 10 Q -(b-)(4-)~------~ 

11 rb)(4) 

12 (b)(4) !? 

13 A l(b)(4) I 

14 (b)(4) 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Page 261 

1 Nowak 

2 (b)(4) 

3 

4 

5 

6'-----------------~ 

7 0 Going down a little further to 

B 12:05:11 bJ(7J(CJ says, ~fb_l(4_I~--~ 

g (bl(4l Can you tell me what fly 

10 IS. 

11 A Sure. That's short for 

12 butterflies. A butterfly is when -- so it's 

13 a trade where you say buy the at the money 

14 strike and sell two wing options, or if you 

15 sell the at the money and buy two wing 

16 options against it. 

17 0 What do you mean by wing 

18 options? 

19 A Wing options means something 

20 that's further away from the at the money 

21 strike, so a very high strike or a very low 

22 strike usually is referred to as a wing 

23 option. So basically if we did this trade 

24 that would be net selling flies. Selling 

25 flies refers to buying at the money, and 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 

Nowak 

2 selling out of the money options. 

3 Q Skip to the page ending 043. 

4 A Okay. 

5 0 If you can read the first three 

6 line entries there starting 13:09:47. 

7 A Okay. 

8 0 I wanted you to explain what 

9 this conversation is about. You may need to 

10 read back a couple lines, I'm not sure. 

11 A Actually, yes, I think it's a 

12 stand alone. It does actually start where 

13 you're starting. 

14 So I just1~,(b~l(~3)"7~U0scc-§~1°2-•1 

15 b)(3)7USC §12(CEA) (b)(4) 

16 

17 

18 

19 

20 

21 '----o~~T~h-is_w_o_u_ld_b_e',i~,;~~3⁄43"~~7 rr-.-------' 

22 A fb)(3)7USC §12(CEA) (b)(4) I 

23 (b)(3) 7 USC §12 (CEA) (b)(4) 

241 

25 '-----------------~ 

Page 263 

1 Nowak 

2 b)(3) 7 USC §12 (CEA) (b)(4) 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

b)(3) 7 USC §12 (CEA) (b)(4) IKb)(7)(fo_b)(3) 13 

b)(3) 7 USC §12 (CEA) (b)(4) 14 

15 

16 

17 

18 

19 

20 0 Just explain to me again why 

21 it's more expensive to be long. 

22 A Because it's similar to like --

23 if you think about the cash and carry trade 

24 I explained yesterday, the futures price is 

25 higher than where the OTC values it, and 

Pages 260 - 263 
Page 264 

1 Nowak 

2 it's also higher than where if you just 

3 bought gold and paid for it and funded it 

4 with all the storage costs, it's cheaper for 

5 us to have the trade on the other way. So 

6tb 0 es htthft or e u ures an di ona th e cas h 

(b)(4) IKb)(7) U(b)(4) 7 

,'-'II' J 1(b)(4) 8 I 

(b)(4) 9 (b)(4) f__l?)(7)(~b)(4) 10 

11 (b)(4) 

12 I 

13 0 KbJ(4) 

(b)(4) 14 

(b)(4) 15 I? 

~b)(4) 16 A I 

17 (b)(4) 

18 

19 

20 0 Why do you have aI

(bl(4l 

21 (b)(4) 

b)(4) 22 A 

23 (b)(4) 

24 ~--=~---------,-J 25 Q (b)(4) 

Page 265 

1 Nowak 

2~? 

3 ~lc-fb~)(4-) -1 

4 MS. RY ALL: Do you have any 

5 questions about this e-mail? 

6 MR. HAYECK: Yes. 

7 EXAMINATION BY MR. HAYECK: 

8 a On page ending in 39. 

9 A Okay. 

10 Q The second entry at 12:05:42, 

11 Mr. b)(7)(C a s,(b)(3)7USC §12(CEA) (b)(4) 

12 (b)(3)7USC §12(CEA) (b)(4) 

13 (b)(3)7USC §12 

14 A (b)(3) 

15 a ""ib-1(3-1"'°7-u-s-c~§-1-21-c-,A-1~(-bl-14-1 --~ 

16 (b)(3)7USC §12(CEA) (b)(4) 

17 

~=~-----------~ 18 \~lSJF. 

19 A l(b)(3)7USC §12(CEA) (b)(4) 

20 (b)(3) 7 USC §12 (CEA) (b)(4) 

21 

22~------------~ 

23 EXAMINATION BY MS. RYALL: 

24 Q Which line is that? 

25 A l(b)(3) 7 USC §12 (CEA) (b)(4) 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 

Page 266 

Nowak 

2 Q Okay. 

3 =,;A_;..,,.~'\,b'-,)(3-)~7~U~S~C'-,§~12_(_C_EA..;)..;(b..;)(;..4);.._ __ .,__ 

4 b)(3) 7 USC §12 (CEA) (b)(4) 

5 

6~--------------~ 7 Q That's the bottom of 38? 

8 A The bottom of 38, yes. And then 

9 you can tell that I am actually -- my 

1 O comment, the first line and the third line 

11 are not referring to the middle line. I 

12 just typed two things and didn't see the 

13 thing in the middle. I said,~~l£3J,7Y,~,,c §12 I 

14 (b)(3)7USC §12(CEA) (b)(4) 

15 

16 

17 

18 

19 

20 

21 

22 

23 ~--A~n~d"11~~"'~",a"l''s:cccc~om=m~e~n~t"in'"""th~e-,e~is,-----~ 

24 saying, (bJ(3J 7 us c §12 (CEAJ (bJ(4l I 

25 l(b)(3) 7 USC §12 (CEA) (b)(4) I 

Page 267 

Nowak 

2 b)(3) 7 USC §12 (CEA) (b)(4) 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

7 17LE_X_A7

M-I-NAT=l~O7N-B~Y=M~R-.-H7A-Y=E=C-K-: --~ 

18 Q If you go to page 042, there is 

19 an entry at 12:56:40, about halfway down, a 

20 little more. 

21 A Okay. 22 Q ~rb-)(4-)~-------i 

23 l1b)(4) I 

24 A Yes. 

25 Q What does that reference mean? 

Pages 264 - 267 
Page 26B Page 270 

1 Nowak Nowak 

2 A ~b)(4) I 2 11 :12:18, and I first start typing at 

3 (b)(4) 3 12:02:21. And usually in the morning that's 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Page 269 

1 Nowak 

2~b~)(4')--------------~ 

3 

4 

5 

6 

7 

8 

9 ~-~M=R-. ~s~c~H~R~O"E~D"E~R~,-w=e-s~h~o-u"ld'n~o.,..,te 

10 for the record that we are requesting 

11 FOIA confidential treatment of the 

12 transcript for today and yesterday. We 

13 will follow up in a letter with you, 

14 Christine, to confirm that. 

15 MS. RYALL: Okay. I expected 

16 you to. 

17 0 Exhibit 18, the conversation 

18 appears to be September 12, 2008, and the 

19 time again is 12:02. Do you know if that's 

20 New York time? 

21 A I'll try to figure that out. 

22 Just give me one second. These look to me 

23 to be London times. 

24 Q Why do you think that? 

25 A Because I joined the room at 

4 right around the time I will log in the 

5 first time, which is about 6:12 in the 

6 morning. And then I usually get in the 

7 office right around 7 o'clock in the 

8 morning, which would have been when I first 

9 started typing on i"'t.~---

10 O Where isllbl(7l(CI V 

11 A He is in London. 

12 MS. RYALL: Are you finished? 

13 MR. HAYECK: Yes. 

14 MS. RYALL: Let's mark this as 

15 number 19. 

16 (Instant message exchange was 

17 marked as Commission's Exhibit 19 for 

18 identification, as of this date.) 

19 THE WITNESS: Okay. 

20 0 Do you recognize this document? 

21 A Like the last one, I know what 

22 this is, but I don't specifically remember 

23 the exact one of these. 

24 0 This is what? 

25 A This is an instant Bloomberg 

Page 271 

1 Nowak 

2 chat room that is called~bl(4l I 3 b)(4) 

4 

5 ~-a~~l-s"th_r_s_o_p_e_n_a"ll-t'he~t,-m-e'?.a 

6 A Yes. 

7 MR. HAYECK: We are looking at 

8 Exhibit 19. The Bates stamp number 

9 begins with JPM-AG 00189898. 

10 MS. RYALL: Yes. 

11 0 The first thing I want to direct 

12 your attention to is on the page marked 900. 

13 A Okay. 

14 0 About the middle of the page, 

15 18:59:12. 

16 A Okay. 

17 Q And 'icl(b~ll7~I(~cI--~lsays, [bI(4I I 

18 !(b)(4) I 

19 A Yes. 

20 Q What is a lakh? 

21 A 100,000 ounces. I think 

22 technically it's spelled L-A-K-H, but I'm 

23 not sure, something like that. 

24 0 Does that refer to a particular 

25 metal? 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 268 - 271 
Page 272 Page 274 

1 Nowak 

2 A No. It can be 100,000 ounces of 

3 anything. 

4 0 Next let's go to page 902. Read 

5 about one-third of the way down. 

6 A Okay. 

7 O That passage. 

8 A Okay. 

9 0 Can you explain to me what this 

1 O conversation is about? 

11 A Sure. So~l(b~l(~71~(c~Jl(~bl"'(4'1 --~ 

12 (b)(4) I 131 

14 ~,Q~-"l(b~)(~4)~--------~7~ 

15 A l(b)(4) I 

16 (b)(4) 

17 

18 

19 20~-Q~~w=h-a-td~o-e_s_t~h-a't_m_e_a_n~?----~ 

21 A b)(4) ~! l(b)(4) 

Page 273 

1 -----~N~o~w~a~k _________ _ 2 (b)(4) 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19~---------------~ 

20 0 When you say "you guys," who are 

21 you talking about? 

22 A Asia. Not our Asia desk, but 

23 the Asia market slash tocom market. 

24 0 Was that something unusual that 

25 you observed for those 50 days? 

Nowak 

2 A KbJ(4) I 

3 b)(4) 

4 

5 

6 

7~~-----------~ 

8 0 Do you see any sIgnifIcant 

9 pattern to where the prices are in Asia and 

10 where they go when New York opens? 

11 A b)(4) 

12 b)(4) 

13 

14 

15 

16 

17 

18 

19 ~-a~~o~n"t"he~n7ex~t=a~g7e,'9"0~3~,7at~--~ 

20 1:38:15, b)(7)(C) says,Lfb_l(4_1 __ ~ 

21 !(b)(4) 

22 Can you explain what he means by 

23 that? 

24 A Sure. fbl(4l 

25 fb1(4) 

Page 275 

Nowak 

~ l(b)(4) 

5 Q "You" means the client? 

6 A KbJ(4) I 

7 b)(4) 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 ~--------------~ 

23 Q How did they sell a delta hedge 

24 to you? Is that a different product? 

25 A b)(4) 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 272 - 275 
Page 276 Page 278 

1 Nowak 2 ~(b-)(-4) _____________ _ 

3 

4~--------------~ 5 Q The same page, 903, at the very 

6 bottom, 1 :44:02,Kbl(7J(CJ l it goes to the 

7 next page, it says, bJ(4J 

8 (b)(4) 

9~--------------~ 10 A Yes. 

11 Q Could you explain what that 

12 means? 

13 A Yes. He is saying thatl(bl(4I I 

14 (bJ(4l i which is the stuff 

15 discussed above. KbJ(3J 7 us c §12 (CEAJ (bJ(4l 

16 (b)(3)7USC §12(CEA) (b)(4) 

17 

18 

19 

20 

21 

22~-o~-Y-e_s __ ----------~ 

23=,;.A-'-------=fb-l(-7)-(C~Jl~is~s~a~y~in~g~t~h~a~t-bl_(4_I _ _,_ __ 

24 (b)(4) 

25 

Page 277 

1 Nowak 

2 (b)(3) 7 USC §12 (CEA) (b)(4) 

3 

4'===--==-=-----~-~ 

5 (bJ(3J 7 us c §12 (CEAJ (bJ(4l I we 

6 talked about that a little bit yesterday, 

7 that means Kbl(4l I 

8 (b)(4) 

9 

10~--=------,,=========,~ 11 Q l(b)(4) I 

12 ~(b-)("4)-~---------rol?~ 

13 A Kb)(4) I 

14 Q~ 1•(b~)(~4l~-------~I 

15 (b)(4) I"( 

16 A fb)(41 I 

17 Q Because you want to trade? 

18 A Just to kept terminology, if 

19 it's showing where we would buy it, we would 

20 sayl(bJ(4J I ~i l(b)(4) 

24 Q The benefit goes a little bit 

25 towards the counterparty? 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 

Nowak 

2 A ~ 3 Q b)(4) ? c!sss=======--~ 4 =c-A'-----_.f_bl(_4I _______ .,__ __ 7 

~ rb)(4) 

7 EXAMINATION BY MR. HAYECK: 

8 Q Going to page one of Exhibit 19. 

9 A Okay. 

1 O Q It starts with a date at the top 

11 of February 9, 2009, 12:03 a.m. Do you know 

12 what time zone this exhibit reflects? 

13 A It's probably easier to figure 

14 out from when I am doing stuff. This looks 

15 like it has to be London times, and I can 

16 tell that from the fact that all of the 

17 joining the rooms of the New York people 

18 happen around that, you know, 12 to 13 time, 

19 which would be 7 to 8:00 a.m. 

20 EXAMINATION BY MS. RYALL: 

21 Q Which page are you looking at? 

22 A Page 99. I can see a bunch of 

23 New York people saying "join the room," 

24 which refers to when we log into the system. 

25 Q Who are those people? 

Page 279 

1 Nowak 

2 A We have "vb~)(?-)(_C_) --~I. fb)(7)(CI 

3 -I(b-)(7"")(C-)'I, fbJ(7)(C) I_ 

4 Q tbl(71(CI I is at 11 :19:17? 

5 A Yes. Actually, sometimes he'll 

6 log in and log off just because you get 

7 disconnected or something. Then he actually 

8 rejoins at 11 :19:24, fb1mrc1 lat 

9 11 :27:14, myself at 11 :42:20,j{bI(71(CI I 

10 at 11 :42:52, fbI(71(CI lat 11 :43:57, so on 

11 and so forth. So those are everybody 

12 getting into the office and logging on to 

13 their system, which is always around that 6, 

14 7, 8:00 a.m. time. 

15 Q In New York? 

16 A In New York. So these must be 

17 London times. 

18 EXAMINATION BY MR. HAYECK: 

19 Q If we move to the page ending 

20 901, and the date moves to February 10th, 

21 these would be what appear to be early 

22 morning times and would be reflective of 

23 early evening New York on the 9th? 

24 A Exactly, correct, yes. 

25 MR. HAYECK: Thank you. 

Pages 276 - 279 
Page 280 Page 282 

1 Nowak 

2 MS. RY ALL: Let's mark this as 

3 20. 

4 (Instant message exchange was 

5 marked as Commission's Exhibit 20 for 

6 identification, as of this date.) 

7 MS. RY ALL: This is a two-page 

8 exhibit, and the first page has a Bates 

9 number of JPM-AG 00206612. 

10 THE WITNESS: Okay. 

11 Q Do you recognize what this 

12 document is? 

13 A I can tell that it's an instant 

14 Bloomberg chat room, but it's one I'm 

15 actually not familiar with. I don't know 

16 what the joining thread of all these people 

17 are, but I do know some of the names in this 

18 chat. 

19 Q Can you tell what the time zone 

20 is, what these actual time stamps reflect, 

21 based on the persons that you know and where 

22 they are located? 

23 A This looks like it's London 

24 time. 

25 Q Why do you say that? 

Page 281 

1 Nowak 

2 A The people that I know in London 

3 seem to join the room at 7:30 to 8 o'clock, 

4 which is normally the time London people get 

5 in. 

6 Q Which ones are those? 

7 A So the ea le I know that are in 

8 London are bJ(7J(CJ , which is 7:37:35, 

9 actually, sorry, he doesn't log in. He 

10 joins the room at 6:41 :47. Then there's 

11 l(b)(7)(C) I, 7:44:14, fb1(7)(C) I, I 

12 don't know how to pronounce her name, 

13 l(bl(7J(CJ I 7:48:53, so on and so forth. 

14 Q I want to direct your attention 

15 to the second page, which is Bates ending 

16 613. 

17 A Okay. 

18 Q And near the bottom at 14:20:01, 

19 l(b)(7)(C) !says, fb1(41 

20 l(b)(4) 

21 A Okay. 

22 Q Do you understand what he is 

23 saying there? 

Nowak 

2 b)(3) 7 USC §12 (CEA) (b)(4) 

3 

4 ~-------~===~~-r 

5 MR RAISLER· Kb)(3)7USC §12 " " /\\ fh\fA\ 

6 A f~l~3J7,~,~;=: §12 I 

7 Q How do you spell that? 

8 A fbJ(3) 7 USC §12 (CEA) (b)(4) 

9 MR. RAISLER: Yes. 

10 A ~b)(4) 

11 (b)(4) 

12 

13 14 l~(b~)(4M)-----------.,.,fib)~(7-)(C~)-....L_~I 

15 (b)(3)7USC §12(CEA) (b)(4) 

16 

17 

18 

19 ~--------------~ 

20 Q ltdoes? 

21 A Yes. It's just terminology that 

22 people use. 

23 Q So 1-1b-)(7_)(_C_I ---'l("b-)(-3)_7 __ 

24 b)(3) 7 USC §12 (CEA) (b)(4) 

25 (b)(3) 7 IIC:f'.&1?" 

Page 283 

1 Nowak 

2 A What I read this as, and I can't 

3 say this with 100 percent certainty, but the 

4 way I would read this is KbJ(7J(CJ I is 

5 (b)(3) 7 USC §12 (CEA) (b)(4) 

6 

7 

8 

9~--------------~ 

10 MS. RYALL: We're finished with 

11 that one. Let's mark this as 21. 

12 (E-mail chain was marked as 

13 Commission's Exhibit 21 for 

14 identification, as of this date.) 

15 MS. RYALL: This is a three-page 

16 exhibit, and the first page is Bates 

17 number JPM-AG 00275625. 

18 THE WITNESS: Okay. 

19 Q Do you recognize this document? 

20 A Yes. 

21 Q Can you tell me what this is? 

22 A This is part of a discussion 

23 between me and bJ(4l 

24 A Mostly, yes. 24 (b)(4) "Let's XXX" means 

4 25 exercise. Lrb_l1_1 __________ ~ 25 ~---------------~ 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 280 - 283 
Page 284 

1 ~----~N~o~w~a~k ___ _ 2 (b)(4) 

4 3 ~-;c:--=---==,,...---"'-,. Q Who is bJ(7J(CJ ? 

5 A He is someone that works for 

6 (bJ(7J(CJ in risk management. He has a 

7 similar job to (bl(7J(CJ who is another 

8 person we spoke about yesterday. 

9 Q So this e-mail, the second one 

1 0 down, shows you proposing fbl(4l 

11 for individual traders. ~----~ 

12 A l(b)(4) 

13 l(b)(4) 

14 Q So were these fbJ(4l 

~----~ 15 for2010? ~---------~ 16 A fbl(41 I 

17 (b)(4) 

18 

19 

20 ~------------~ 

21 0 It sounds like there is also a 

22 (b)(4) 

23 (b)(4) 

b)(4) 24 A 

25 (b)(4) 

Page 285 

1 Nowak 

2 b)(4) 

(b)(4) 3 Q 

4 (b)(4) 

5 (b)(4) ? 

6 AS av tht a aqaIn. 

7 Q (b)(4) I 

8 (b)(4) 

9 

10 

11 A (b)(4) I 

12 Q (b)(4) I 

13 (b)(4) 

14 

15 I

(b)(4) 17 

16 A ~b)(4) I 

17 (b)(4) 

18 

19 

20 

21 

22 

23 

24 

25 

Page 286 

Nowak 

2 b)(4) 

3 

4 

5 

6 

;~--M~S-_-R_Y_A_L_L_•_W_e_'r_e_f,-n-,s-h_e_d_w_,t_h_~ 

9 that one. 

10 THE WITNESS• Okay. 

t t MS. RY ALL• This will be the 

12 next exhibit, 22. 

13 (E-mail was marked as 

14 Commission's Exhibit 22 for 

15 identification, as of this date.) 

16 MS. RYALL• This is a two-page 

17 exhibit, the first page is Bates number 

18 JPM-AG 00256521. 

19 Q Do you recognize this document? 

20 A Yes. 

21 0 What is it? 

22 A It's an e-mail from me to~ 

23 l(bJ(7J(CJ I, responding to a l(bJ(7J(CJ I article. 

24 Q Could you tell me why you 

25 responded to this particular article? 

Page 287 

1 Nowak 

2 A fbJ(7)(C) 

3 (b)(4) 

4 5~-------------~ 6 Q By "us" you mean? 

7 A J.P. Morgan. Yes, J.P. Morgan, 

8 yes. 

9 Q Was anything done in response to 

10 this particular e-mail? 

11 A fbI(4) 

12 fbI(4) 

13 Q Did you do anything other than 

14 forward this link to~ 

15 A fb)(4) I 

16 (b)(4) 

17 

18 

19 

20 

21 

22 ~--------------~ 

23 Q There is a chart attached to it, 

24 which is the second page. Could you tell me 

25 what this depicts? 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 284 - 287 
Page 288 Page 290 

1 Nowak Nowak 

2 A Sure. This is a chart that 2 EXAMINATION BY MS. RYALL: 

3 shows l(bl(4l I 3 0 Could you tell us whof~b~I17~I1~c-I -, 

4 (b)(4) 4 is? 

5 5 A I know he is somebody who writes 

6 6 articles about the precious metals market 

7 7 that has a bunch of people that subscribe 

8 8 and follow him. 

9 9 0 Have you ever had any direct 

10 10 contact with him? 

11 11 A Never. 

12~--------------~ 12 MS. RYALL: We will mark this as 

13 MR. HAYECK: What exhibit number 13 23. 

14 is this? 14 (E-mail was marked as 

15 MS. RYALL: This is number 22. 15 Commission's Exhibit 23 for 

16 EXAMINATION BY MR. HAYECK: 16 identification, as of this date.) 

17 Q Just for the record, who is 17 THE WITNESS: Okay. 

18 !(b)(7)(C) I? 18 MS. RYALL: This is a one-page 

19 A He is my compliance officer. 19 exhibit, Bates stamp number on the 

20 a What is his official title, if 20 bottom right-hand corner is JPM-AG 

21 you know? 21 00049492. 

22 A That's all I know. I don't know 22 0 Do you recognize this document? 

23 what his actual title is. 23 A Yes. 

24 Q For the record, who isl(bJ(7J(CJ 24 Q What is it? 

25 ilb)(7)(C) I? 25 A It's an e-mail to ~tb_ll7_I(_c_I -~ 

Page 289 Page 291 

1 Nowak 1 Nowak 

2 A fbI(7)(C) 2 a From you? 

3 l(b)(7)(C) I 3 A From me. 

4 0 Have you had any direct contact 4 Q What was the date on this? 

5 with Mr.fbJ(7J(CJ !about this issue? 5 A 9/9/08. 

6 A No, nothing directly. 6 Q Do you recall sending this 

7 0 And the date on Exhibit 22 is 7 e-mail? 

8 March 11, 2009. To the best of your 8 A Yes, actually I remember this 

9 recollection, is that when this e-mail was 9 one. 

1 o sent by you? 10 Q Who is!(b)(7)(C) p 

11 A Yes. I'm sure the date stamp is 11 A She is someone that works for 

12 right on this. There is no reason that 12 l(b)(7)(C) I 

13 would be wrong. 13 0 What is her position? 

14 EXAMINATION BY MR. SMITH: 14 A I don't know exactly. 

15 0 Do au know about the time that 15 Q I see there is a c.c. to f'b1rnrc1 

16 Mr. b)(7)(C) 's b)(4) 16 fbl(71(CI L Is thajlbl(71(CI I? 

17 (b)(4) ~------~ 17 A Yes, it is. 

18 A b)(4l 18 Q What prompted you to send this 

19 (b)(4) (b)(7)(C 19 e-mail to 1b1m1c1 1 if vou recall? ' 20 (b)(7)(C) (b)(4) So 20 A fb)(4) fb)( tbl(4) I 

21 if you actually go on the Web and you can 21 (b)(4) I 

22 see the date of the release,tbJ(4J I 22 fb)(4) Kb)(7)(C) ~b)(4) 

23 l(bl(4l I because in those, in 23 (b)(4) 

24 those articles he tells everybody to e-mail 24 

25 l(bl(7J(CJ I and complain. 25 ~-------------~ 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 288 - 291 
Page 292 Page 294 

1 Nowak Nowak 

2 b)(4) ~ l(b)(4) 

3 ~:::----:-:--::---====,-------~ 4 O Here it says, bJ(3J7usc §12 

5 0 Do 5 b)(3)7USC §12(CEA) (b)(4) you recall specifically what 

6 some of the complaints were? 6 A Yes. 

7 A fb)(41 I 7 Q What did thatL!(b_l(4_1 --~ 

8 (b)(4) 8 (b)(3)7USC §12 ? 

9 A b)(3) 7 USC §12 (CEA) (b)(4) 9 

10 10 b)(3)7USC §12(CEA) (b)(4) 

11 t t 

12 12 

13 13 

14 14 

15 15~----------====~ 

16 16 0 Do you recall what had bJ(3l 7 us c 1? /(;FA1 

17 17 fbJ(3)7USC §12(CEA) (b)(4) r 

18~------------~ 18 A Which specific --

b)(4) 19 0 Do you usually read his 19 Q I 

20 (b)(4) 20 articles? 

b)(4) 21 A Only when I have gotten e-mails 21 A I 

b)(4) 22 from fbl(7)(C) rs office, and then I go 22 

23 and see what the guy wrote, but that's the 23 

24 only time. 24 

b)(4) 25 0 You said he makes inaccurate 25 Q I 

Page 293 Page 295 

1 Nowak 1 Nowak 

2 statements. Other thanLfb_l(4_1 ____ ~ 2 (b)(4) r 

3 l(bJ(4l ~ was there anything else in 3 

1

A fb1(4) I 

4 particular that you recall that you felt was 4 0 Again, in the second paragraph 

5 inaccurate? 5 you say, (b)(3)7USC §12(CEA) (b)(4) 6 A ~b~)(4~)---------~ 6 (b)(3) 7 USC §12 (CEA) (b)(4) 

7 (b)(4) 7 A Yes. 

Q fb)(4) 8 8 

(b)(4) 9~-------===---~~ 9 1? 

10 Q And did Mis bJ(7l(CJ bJ(4l 10 A Yes. l(b)(3) 7 USC §12 (CEA) (b)(4) I 

11 (b)(4) 11 b)(3) 7 USC §12 (CEA) (b)(4) (b)(4) 12 12 

b)(4 13 A 13 

b)(4) 14 Q So it says in this e-mail, l(bJ(41 14 Q 

15 l(b)(4) 15 (b)(4) 

A 16 ~ 16 (b)(4) 

17 Q What b)(4) did you do? Do you recall 17 A I 

b)(4) 18 what you did to actually come up with this 18 Q I 

19 information? 19 (b)(4) 

20 A fb)(4) I 20 I 

21 (b)(4) 21 (b)(4) IMr.~bJ(7J(CJ r1 

22 22 A What was that? 

23 23 Q (b)(4) 

24 24 (b)(4) 

25 25 (b)(4) Mr. 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 292 - 295 
Page 296 Page 298 

1 Nowak Nowak 

2 said. 2 0 So we talked yesterday about 

3 A 

4 (b)(4) 

KbJ(4) I 3 some e-mails that discussedKbJ(4l 

4 (b)(4) I 

1 

5 5 (b)(4) I? 

6 6 A ~b)(4) 

7 7 (b)(4) 

8 8 

9 9 

10 10 

11 11 

12 12 

13 13 

14 14 

15 15 

16 16 Q fb)(4) I 

17 

18 

19 

Q 

A 

(b)(4) 

(b)(4) I 

I? 

17fb)(4) 

18 A 

19 (b)(4) 

~b)(4) I 

r 

20 Q (b)(4) I 20 

21 (b)(4) l(b)(7J(CJ I 21 

22 (b)(7)(C)~b)(4) i? 22 Q Has thefbll4I I 

23 

24 

25 

A 

(b)(4) 

fb)(4) I 

I 

23 r(4) 

24(b)(4) 

25 A l(b)(4) 

I? 

Page 297 Page 299 

1 Nowak 1 Nowak 

2 (b)(4) 2 b)(4) 

3 3 

4 ~-a~~D'o_y_o_u-ge_t_a_n_y_o_f~t-h-os_e_e--m-ai-1s~ 

: ~--M~S-. ~R-Y_A_L_L_: _W_e_w_i_ll_m_a_r_k_th_i_s_a_s~ 5 directly yourself? 

6 A No. 6 the next exhibit. 

7 EXAMINATION BY MR. HAYECK: 7 (Instant message exchange was 

8 Q (b)(4) 8 marked as Commission's Exhibit 24 for 

9 (b)(4) 9 identification, as of this date.) 

10 10 MS. RYALL: This is a five-page 11 ~(b~)(7~)(~C~)-b)"(4') ---------~-~ 11 exhibit. The first page has a Bates 

12 (b)(4) . 12 number JPM-AG 00208619. 

13 A (b)(4) 13 THE WITNESS: Okay. 

14 Q ~(b-)(4~)---~----7 14 0 Do you recognize what this 

15 (b)(4) 15 document is? 

16 A b)(4) 16 A It is an instant -- Bloomberg IM 

17 (b)(4) 17 between (bJ(7J(CJ who I do know and 

18 (bl(4l -- I started 18 (bJ(7J(CJ who I don't know. 7 7 19 answering before you finished the question. 19 0 You don't know a f"b"ll7iil(C'I -- 1? 

20 (b)(4) 20 A No. 

21 21 O You have never had any contact 

22 22 with him through your employment? 23 ~(bili)(M4)----------,ll~\(b-)(7~)(~C.-I_J 23 A Never. 

24 (b)(7)(C)~b)(4) I 24 0 I want to direct your attention 

25 EXAMINATION BY MS. RYALL: 25 to the bottom of the first page at 16:04:25, 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 296 - 299 
Page 300 

1 Nowak 

2 ~(b")(7")(~C') ----,I Sa"S Kb)(4) I 

3 (b)(4) I 

4 (b)(4) I 

5 At the beginning of the next 

6 page tbl(71(CI lsays,-~fb"'l(4"'1~=_,,,l(b"'l(7"1("'c"1 I" 

7 A Okay. 

8 0 As a trader, can you tell me 

9 what fbl(7J(CJ I is talking about in that 

1 O line on the bottom of the page, 619? 

11 A It's actually one of the more 

12 confusing statements of the entire passage. 

13 I can do my best to -- I can explain some of 

14 the jargon, but I can also explain why this 

15 doesn't make any sense to me if that helps. 

16 0 Okay. 

17 A K~lb')(4')-------~I 18 ~(b")("4) _ _._ _________ .,_ __ ~ 

19 

20 

21 

22 

23 

24 bcvec---------,------' 

25 (bl(4

l I I guess based 

Page 301 

1 Nowak 

2 on my explanation you can see why I'm 

3 confused. It seems like he saidKbl(4J 1 

4 (b)(4) 

5 

6 

7 

8 

9 

10 

11 ~-:0,----,l(b"")("'4)=========,;-1~ 

12~ 

13 A fb1(4) I 

14 l(b)(4) I 

15 0 Who have you heard use that term 

16 before? 

17 A I'm not sure. 

18 ="'o~~Kb_l(r-'I __________ _JI 

19 (b)(4) p 

20 A Kb)(4) I 

21 (b)(4) 

22 

23 

7 24 "'E7

X~A7M~IN~A~T~l~O7N~B~Y-M=R-. ~HAY~E~C~K~:--~ 

25 Q (b)(4) 

~---------~ 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 

Page 302 

Nowak 

2 l(b)(4) I? 

3 A I don't think -- not that I 

4 remember, not that I remember. 

5 

6 

7 

Q 

A 

b)(4) 

Kbl(4) 

Kbl(4l 

I? 

I 

8 

9 10 ""E_X_A_M-IN_A_T~IO_N_B_Y_M_S __ R~Y-A_L_L_: ___ J 

11 Q b)(4) l(b)(7)(C) I." 

12 A bJ(7J(CJ I has to refer to~f:b"l(7"I(~C"J I 

13 l(bJ(7J(CJ I. but that's equally confusing. I 

14 don't know what it means. 

15 EXAMINATION BY MR. HAYECK: 

16 0 Have you ever seen Exhibit 24 

17 before? 

18 A I saw part of this with counsel, 

19 but not the whole thing. 

20 Q Which part of it? 

21 A I know I saw this line 

22 (indicating). 

23 0 Which line are you referring to? 

24 A I'm sorry, bJ(4l 

25 l(bJ(4l I ~l_d_o_n-'t_k_n_o_w_i_f _I 'he_a_r_d,., 

Page 303 

1 Nowak 

2 it -- I don't know if I have seen any of the 

3 other parts though. It's possible, but 

4 nothing -- that line I remember 

5 specifically. 

6 0 Other than in preparation with 

7 counsel, have you discussed this 

8 communication with anybody? 

9 A No. 

1 o O Have you looked to see if there 

11 was any trading associated with this comment 

12 on that day? 

13 A I haven't, no. 

14 0 Can you tell if this is New York 

15 time or London time? 

16 A Let me see if I can figure this 

17 one out. This has got to be London time 

18 because there is no wayl(bl(7J(CJ~ould have 

19 been in the office at 7 o'clock at night at 

20 the end of it. 

21 EXAMINATION BY MR. SMITH: 

22 Q Do you know if anybody else 

23 looked at the trading related to this item? 

24 A I'm not sure actually. 

25 EXAMINATION BY MR. HAYECK: 

Pages 300 - 303 
Page 304 

1 Nowak 

2 Q b)(3) 7 USC §12 (CEA) (b)(4) 

3 (b)(3) 7 USC ~12 (CEA) (b)(4) ? 

4 A b)(3)7USC §12(CEA) 

~ rb)(3) 7 USC §12 (CEA) (b)(4) 

7 a Are there any traders there who 

8 deal with you frequently? 

9 A Meaning like people that are my 

1 O equivalent over there kind of thing? 

11 Q Yes. 

12 A For me my equivalent over there 

13 is a guy named l(bl(7J(CJ I. I don't know 

14 how --l(bJ(7J(CJI orl(bJ(7J(CJ I or something like 

15 that, and he's the option trader over there. i ~ l(b)('I I 

19 Q Was he there during the 2008, 

20 2009 time frame? 

21 A Yes, yes. 

22 0 Do you know if there is someone 

23 else who would be an e uivalent ofl(bJ(7J(CJI 

24 l(bJ(7J(CJ lor bJ(7J(CJ during that time 

25 frame at (bl(7J(CJ ? 

Page 305 

1 Nowak 

2 A There were, but I don't know who 

3 they are because I don't deal with them 

4 myself. 

5 0 Earlier in the IM on page one, 

6 just starting from the very beginning, the 

7 third entry they are talking about someone 

8 who covers JPM dudes, and !(bl(7l(Cl I a 

9 couple of entries later says he is doing a 

1 O great job. Do you have any idea what that's 

11 about? 

12 A I don't know. I could guess if 

13 you'd like me to. 

14 0 Sure. 

15 A It reads like, bJ(7J(CJ says, "I 

16 have a colleague named bJ(7J(CJ that's in 

17 town who covers some JPM dudes." So he is 

18 a -- it sounds to me he is a salesman that 

19 covers some JPM traders. And ~---~ fbJ(7J(CJ 

20 says he is doing a good job covering the 

21 J.P. Morgan people. 

22 O If you look at the third page of 

23 the exhibit, which ends in Bates stamp 621. 

24 A Okay. 

25 Q Starting at 7:22:33, 17:22:33, 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 

Page 306 

Nowak 

2 they are talking about~someone who 

3 left to go to l(bl(7J(CJ I. Do you know 

4 who that is? 

5 MS. RYALL: A redhead. 

6 A That's the part I'm actually 

7 trying to remember. Actually, I don't know 

8 who that is. I can't think of any redhead 

9 that has ever worked on my desk. It's 

10 entirely possible he is not even referring 

11 to J.P. Morgan. He might be referring to 

12 somewhere else, but no, I definitely 

13 100 percent don't know who that is at all. 

14 Q There are some references in 

15 there to[bl(7J(cl, who apparently has skeletons 

16 in his closet. Do you know who that is? 

17 A Again, I don't know this for 

18 certain, but it's most likely Lb_l(7

~1(~CI=~"---~ 

19 because there is a u named bJ(7J(CJ 

(b)(4) (b)(6) (b)(7)(C) 20 

21 

22 Q How do ou spell his last name? 

23 A bJ(7J(CJ . But again, I don't 

24 know that for sure definite! , but that's 

the only b)(7)(C)(b)(4) (b)(6) (b)(7)(C) 25 

Page 307 

1 Nowak 

2 EXAMINATION BY MS. RYALL: 

3 Q Did he have any skeletons in his 

4 closet? 

5 A That's an interesting one. 

6 EXAMINATION BY MR. HAYECK: 

7 Q :b)(4) I 

8 l(b)(4) - I? 

9 A b)(4) I 

10 l(b)(4) 

11 I 

12 Q b)(4) I? 

13 A ccb"l(4 " ________ 1,-.-, 1 

14 (b)(4) I 

15 Q fb)(4) I 

16 ~b)(4) I 

17 fb)(4) 

18 A KbJ(4l I 

19 b)(4) 

20 

21 

22 L----c=--------,---' 23 Q fbl(4I I 

24 l(b)(4) [? 

25 A fb)(4) I 

Pages 304 - 307 
Page 30B Page 310 

1 Nowak Nowak 

2 fb)(4) l(b)(7)(C) I. 2 Q Have you ever used the term? 

3 0 fb)(4) I 3 =-A'----'-fb_)(4_I _______ _,I __ 4 (b)(7)(C) fb)(4) I? 

5 A fb)(4I I 

6 (b)(4) 

7 

8 

9 

10 '=-~==~=====---'--- 11 EXAMINATION BY MS. RYALL: 

12 0 I want to go to page 622, the 

13 very bottom, the last two lines at 19:24:26. 

14 A Okay. 

15 0 ~rb-)(7")("'C') --,1 says, b)(4) 

16 (b)(4) 

17 

18 

(b)(4) 

(b)(4) 

b)(7)(C) ~ 

19 A Okay. 

20 0 What is KbJ(4J t 

fbI(4) 21 A 

~~ l(b)(4) 

Page 309 

1 Nowak 

2 (b)(4) 

3 

4 

5 

6 

7 

8 

9 

10 0 On the next page, 623, 

11 (b)(7)(C) says, bJ(4l 

12 (b)(4) 

13 

14 A rb)(4) 

b)(4) 15 0 

16 l(b)(4) p 

17 A Not necessarily. 

18 0 (b)(4) 

(b)(4) 19 

(b)(4) 20 A 

;; l(b)(4) 

23 MR. RAISLER: f

0I'4I 

24 l(b)(4) I? 

: rb)(4) 

6 MS. RYALL: Let's mark this as 

7 25. 

8 (Instant message exchange was 

9 marked as Commission's Exhibit 25 for 

1 O identification, as of this date.) 

11 MS. RYALL: This is a five-page 

12 exhibit, and on the first page it has 

13 the Bates stamp JPM-AG 00209214. 

14 THE WITNESS: Okay. 

15 EXAMINATION BY MS. RYALL: 

16 Q Do you recognize what this 

17 document is, and this is Exhibit 25? 

18 A It's an instant Bloomber chat 

19 betweenfbl(7J(CJ I and bJ(7J(CJ 

20 Q Have you seen this particular 

21 instant message before? 

22 A It's possible I have seen this 

23 one with counsel as well. This one doesn't 

24 have the -- I don't specifically remember it 

25 like I did the last one, but it's certainly 

Page 311 

1 Nowak 

2 possible I saw this one, or at least part of 

3 it. 

4 Q Is there a way that you can tell 

5 what time zone this is in? 

6 A Let me try to figure that out. 

7 This has also got to be London. 

8 0 Why do you say that? 

9 A Because again, ~!(b-l(~,I-(c-I --~ 

1 O wouldn't have been working at 7 o'clock at 

11 night. 

12 Q What time did he usually leave? 

13 A Probably around 4:00 or so, 

14 maybe 4:30. 

15 O ~I(b-I(7-l(-cI=·I is in London? 

16 A He is based out of London. 

17 don't know where he was right at the time of 

18 this e-mail. 

19 Q His normal work office is in 

20 London? 

21 A Correct, yes. 

22 O ~Kb~)(4~) ______ _,fccbl('-7)"'"(CI 

23 j{b)(7)(C) I? 

24 A K~b-)(4-)-------~ 

25 EXAMINATION BY MR. SMITH: 25 (b)(4) fb1(71(CI l"s 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 308 - 311 
1 

Page 312 

Nowak 

2fb)(4) 

3 Q What period of time was that? 

4 A !(b)(7) !(b)(4) 

~ rb)(4) 

7 a So December, '09? 

8 A Yes. 

9 Q If I can direct your attention 

1 O to the first page at 12:42:27 ,l(bJ(7J(CJ 

11 (b)(7)(C) I savs I(b)(4) I 

12 (b)(4) ~b)(3) 7 USC §12 (CEA) (b)(4) I 

13 (b)(3)7USC§12(CEA)(b)(4) I 

14~-~=----,-----~ 15 b)(4I I? 

16 A °'(b""l("'41-r-l~ 

17 Q (b)(4) r? 

,....,.~~~.,_,- 18 A I aon-r acruaIly know. 

19 Q Can you tell me what he is 

20 talking about there? 

21 A Like the other one, there are 

22 parts I can definitely help on. The whole 

23 statement has an inconsistency in it which I 

24 will tell you about. It makes it too hard 

25 to understand exactly what he's doing. He 

Page313 

1 Nowak 

2 talks about that the fact thatf~lSJl 7 ~. - 1 

3 (bJ(3J 1 us c §12 (CEAJ (bJ(4J 1_ That 

4 would imply that fbl(4l I If he is 

5 (b)(4) 

6 

7 8 ~-o--w-h_y_?---------~ 

9 A (b)(4) I 

10 ~(b-)(-4)-~----------~-~I 

11 

12 ~-o~-(b"'l('"1--------,I?~_--~ 

13 A (b)(4) I 

14fb)(4) I 

15 Q (b)(4) 17 

16 A "(b-1(4"1---------~--,I 

17 (b)(4) 

18 

19 

20 

21 

22 

23 

24 

Page 314 

Nowak 

2 !(b)(4) I 

3 b)(4) 

4 

5 

6 

7 

8 

9 

10 ~~~~---~-~----~ 

11 Q Theta Is time decay? 

12 A Correct. 

13 Q bJ(4l what does 

14 that mean? 

15 A I would say -- this is a little 

16 part where I would have to guess, because 

17 it's not super clear. But when I would say, 

18 b)(4) 

19 

20 

21 

22 

23 

24 

25 ~------------~ 

Page315 

1 Nowak 

2 Q Let me stop you. 

3 l(b)(4) 

4 ~fb~)(4") ~~---------L, 

~~? Kb)(4) I 

7 b)(4) 

8 

9 

10 

11 Q b)(4) I? 

12 A b)(4) I 

13 Q b)(4) I? 

14 A b)(4) I 

15 (b)(4) 

16 

17 

18 

19 Q fb)(4) I 

20 b)(4) I? 

21 A b)(4) I 

Q b)(4) 22 I 

23~? b 4 

24 A Yes. I'm just using the Greek 

25 term, bJ(4l 

~----------~ 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 312- 315 

25 
Page 316 Page 318 

1 Nowak Nowak 

2 0 I'm sorry I interrupted you. 2 b)(4) 

3 A The thing that is confusing to 3 

4 me about this statement is that he is 4 

I ~b)(4) 5 saying, fbl(4l 5 Q r 

6 l(b)(4) I That all 6 A fb)(4) 

7 would make sense. (b)(4) I would read that as R5i(4T 7 

8 b)(4) 8 Q b)(3) 7 USC §12 (CEA) (b)(4) I 

9 9 ~b)(3) 7 USC §12 (CEA) (b)(4) I 

10 10 [b)£3l!~~,sc I? "' 

11 11 A ~b)(4) 

12 12 b)(4) 

13 13 

14 14 

15 15 EXAMINATION BY MR. SMITH: 

16 16 Q b)(4) 

17 17 b)(4) 

18 18 (b)(4) ? 

19 19 A b)(4) 

20 20 (b)(4) 

21 21 

~ ~ 

~ ~ 

N N 

25~--------------~ 25 ~-------------~ 

Page317 Page319 

1 Nowak 1 Nowak 

2 it. Do you follow what I'm saying? 2 (b)(4) 

3 Q Yes. 3 

4 =~_."'l(_b_l_( ,:_1-::_-::_-::..-::..-::..-::..-::..-::..-::..-::..-::..-::..-::..-::..-::..~~~ 4 

5 !(b)(4) I? 

6 A i l(b)(4) fb)(4) 

5 

6 

7 {b)(4) fb)(7)(C) l(b)(4) I 

8 (b)(4) 

9 

10 10 

11 Q l(b)(4) 11 

12 {b)(4) ? 12 

13 A KbJ(4) 13 

14 (b)(4) 14 

15 15 

16 16 

17 17 

18 18 

19 19 

20 Q fb)(4) I? 20 

21 A Yes. 21 

22 0 fb)(4) 22 b)(4) rb)(7)(C) fb)(4) I 

23 !(b)(4) 23 b)(4) I 

24 !{b)(4) 24 EXAMINATION BY MS. RYALL: 

25 A 25 Q b)(4) ? 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 316- 319 
Page 320 Page 322 

1 Nowak Nowak 

2 A fb)(4I I 2 be confusing, so I don't want to 

3 (b)(4) 3 confuse the record on this. 

4 4 b)(4) 

5 5 

6 6 

7 7 

8 8 

9 9 

10 10 

11 11 EXAMINATION BY MS. RYALL: 

12 12 Q Here it sounds like~(b~l(7~I(~C'I -~ 

Q Going down a couple of lines to 13 wanted bJ(7J(CJ (bJ(4l 

14 12:44:35. 

13 ~~-~----------~ 

14 l(bl(4I I 

15 A Okay. 15 A fbI(4) I 

16 Q l~(b-l(7'"1("'c1----~I says, 16 Q Thenl(bJ(7J(CJ !says, 

17 (b)(4) 17 j(b)(4) 

18 18 I ~-A-~O-k----------~ 19 ~~A-~1•(b~)("I 4 ________ P~!(~7)'"'( 19 ay. 

20 Q l(b)(4) 20 l(b)(4) I 

b)(4) 21 ~ 21 Q I? 

b)(4) 22 A fbJ(4) 22 A I 

23 Q What does that mean? 23 fb)(4) I 

24 A fbI(4) 24 (b)(4) b)(4) I 

25 !(b)(4) 25 fb)(4) 

Page 321 Page 323 

1 Nowak Nowak 2~b-)(4")---~~~-------~ 

~ rb)(4) 3 

4~-------------~ 

5 =-Q-'----'-flb-I(_4I _________ ...,I 

6 (b)(4) I 6 Q Okay 

7 (b)(4) 1? 7 A ~b)(4) I 

8 A b)(4) It could be, yes. 8 

9 Q Let's skip to the Bates number 9 

10 ending 216, the fourth line down at -~ 10 l(b)(4) ,rcb)(4) 

11 16:10:37, bJ(7J(CJ says, (bJ(4J 11 (b)(4) l~~),(7lKb)(4) I 

12 (b)(4) Kb)(4) l\~),(71 (b)(4) 12 

(b)(4) 13 A Yes. 13 

14 Q Do you know whol~bl(3l Is? 14 

15 A That was a client out of London, 15 

16 but I'm not sure what it stands for. 16 

17 Q l(b)(4) I 17 

18 l(b)(4) 18 Q Kb)(7)(C) lKbJ(4) I 

19 A j(bI(4I 19 b)(4) l(b)(7)( I I 

20 (b)(4) 20 (b)(7)(Cfb)(4) I 

(b)(4) 21 21 I/ 

22 22 A fb)(4) I 

23 23 l(b)(4) I 

24 u Kb)(4) I 24 ~-------------~ 

25 MR. RAISLER: I think this may 25 fb)(4) I? 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 320 - 323 
Page 324 

1 Nowak 

2 A b)(4) 

3 (b)(4) b)(7)(C) 

4 . b)(4) 

5 EXAMINATION BY MR. SMITH: 

6 Q (b)(4) b)(7)(C 

7 (b)(7)(C) (b)(4) 

8 (b)(4) ? 

=~--------~ 9 A fbl(4) I 

1 Q b)(4) 

11 

12 

13 

14LE=x~A~M~l~N~A=T~IO~N~B=Y~M~s-.=R~Y~A~LL~,---~ 

15 o l(b1(41 1 

16 (b)(4) i? 

17 A (b)(4) I 

18 (b)(4) 

19 

20 

21 

22 

23 

24 

25 

Page 325 

1 ----~N~o~w~a~k ______ _ 2 (b)(4) 

3~------------~ 

4 EXAMINATION BY MR. HA YECK· 

5 o fb)(4I I 

6 (b)(4) 

7 

8 9 b,(b")(4")--,, I'?~----------~ 

10 A fb1(41 I 

~; rb)(4) I 

13 o Who would be a check on that? 

14 A fb)(4) I 

15 (b)(4) 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Nowak 

~ l(b)(4) 

5 Q Was it somebody's job to check 

6 on that? 

7 A ~fb")(4")--------~ 

~ rb)(4) 

1 O Q Did anybody have a 

11 responsibility to check on it? 

12 A Kbl(4l I 

13 b)(4) 

14 

15 

16 

17 

18 

0 rb)(4) 19 

20 (b)(4) f( 

21 A fb)(41 

22 b)(4) 

23 ~------------~ 

24 Q Finally, in the last page of 

25 this exhibit, 218, just at the very top 

Nowak 

2 (b)(7)(C) says, fb1(41 

~---~ 3 (b)(4) 

4 A What page? 

5 o Last page, 218, the very top. 

6 A Okay. 

1 o It says, (bJ(4J 

8 b)(4) 

9 

10 ~(b")(4")-------~?---~ 

11 A r;p b)(4) 12 o 

13 l(b)(4) I? 

14 A b)(4) 

15 MR. RAISLER: Would this be a 

16 good time to take a break? 

17 MS. RY ALL: Sure. Off the 

18 record. 

19 (Whereupon, a recess was taken.) 

20 MS. RYALL: Can you mark this, 

21 please. 

22 (Instant message exchange was 

23 marked as Commission's Exhibit 26 for 

24 identification, as of this date.) 

25 MS. RY ALL: Exhibit 26 is a 

Page 326 

Page 327 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 324 - 327 
Page 32B 

1 Nowak 

2 five-page exhibit. The first page is 

3 Bates numbered JPM-AG 00060987. 

4 THE WITNESS: Okay. 

5 Q Are you ready? 

6 A Yes. 

7 Q Do you recognize what this 

8 document is? 

1 ~ bet~eenib9M(h1 an i1::~~r~i'8Rc~bera 1. 

11 Q What's the date? 

12 A September 18, 2008. 

13 Q Directing your attention to the 

14 first pa eat 13:06:03, (bl(7J(CJ 

15 says, bJ(4l 

16 (b)(4) 

17 Do you understand what he is 

18 talking about there? 

19 A bJ(4l 

20 (b)(4) 

21 

22~-Q~---i,bili)(M4)-------,c?~---~ 

b)(4) 23 A 

24 (b)(4) 

25 Q What does that mean, l(bJ(4l 

~--~ 

Page 329 

1 Nowak 

2 !(b)(4) r. 

3 A ~b)(4) I 

4 (b)(4) 

5 

6 

~~-=~---------~~ (b)(4) 7 Q I 

8 (b)(4) I 

9 (b)(4) I? 

b)(4) 10 A I 

(b)(4) 11 Q I 

12 (b)(4) 1? 

13 A Yes. 

14 Q l(b)(4) I? 

15 A Yes. 

16 Q Do you know what it is? 

17 A Yes. 

18 Q What is it? 

19 A (b)(4) 

20 (b)(4) 

21 

b)(4) 22 Q ? 

b)(4) 23 A 

24 (b)(4) 

25 ~-----------~ 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 

Page 330 

Nowak 

2 Q b)(4) 

3 !(b)(4ip ~-------~ 

4 A Yes. 

5 Q Moving down a few lines, at 

6 13:15:09JbI(71(CI I f

0i(7l(CI I, are 

7 you familiar with him? 

8 A Yes. 

9 Q How do you know him? 

10 A He is the forward trader at 

11 l(b)(7)(C) l,~(b_)(7_)(~C_) -~-~---~ 

12 He's been in the market a long time. 

13 Q Do you deal with him at all in 

14 your trading? 

15 A Not directly. 

16 Q Do you ever have communications 

17 with him directly? 

18 A Not in many years. 

19 Q And does Mr.l(bJ(7J(CJ I have a lot 

20 of contact with him to your knowledge? 

21 A I know he has some. I don't 

22 know the extent of it. 

23 Q Do you know whether they are 

24 friendly personally? 

25 A No, I'm not sure if they like 

Page 331 

1 Nowak 

2 each other or don't. I can't figure it out. 

3 It goes both ways sometimes. 

4 Q Do you know whether they 

5 socialize? 

6 A At market functions I have seen 

7 them talk. I don't know if they see each 

8 other outside of market functions. 

9 Q And from the times that are on 

10 here, can you tell what time zone this one 

11isin? 

12 A This is going to be London as 

13 well. 

14 Q Why is that? 

15 A Beginning, you havel~(b_l(7_I(_c_I __ J 

16 signing in at 10:20:27, which is 5:20 a.m. 

17 Q 5:20 a.m. New York time? 

18 A Which is right when he wakes up 

19 usually, and he'll log in. I don't know if 

20 it's exactly when he wakes up, but, you 

21 know. 

22 Q So he normally checks in 

23 immediately? 

24 A Yes, oh, yes. 

25 Q Do you do that? 

Pages 328 - 331 
Page 332 

1 Nowak 

2 A Not as early as he does, but I 

3 usually do check, yes. And then the time 

4 they kind of sign off --

5 0 On the last page, 991? 

6 A Yes, which is 17:53, which is --

7 actually, it's not clear I guess on the 

8 signing off, because that could be -- it's 

9 theoretical that l\~lf7ll could be here late, 4 

1 O o'clock. Usually he leaves about four. I 

11 can probably say with 98 percent certainty 

12 that this is London time. 

13 Q What time does he usually arrive 

14 at work in New York? 

15 A (b)(7J? 

16 Q li,(b"l("7i"(C~) --" 

17 A 6:30, 6:45 usually. I don't 

18 know exactly, because he gets in before I 

19 do. 

20 Q (b)(3) 7 USC §12 (CEA) (b)(4) 

21 (b)(3) 7 USC §12 (CEA) (b)(4) ? 

22 A bJ(4l 

2:J !(b)(4) I 

24 Q What doesl(bJ(4l !mean? 

,,C(b,;)(4;:_):::..:====='-"-', 25 A 

Page 333 

1 =====,,N7o.,,wccacik=-------~ 2 (b)(3) 7 USC §12 (CEA) (b)(4) 

3 

4 

5 

6~~~====-~----~ 7 o l\~l~3J7,~,~;=: §12 I 

8 (b)(3) 7 USC §12 (CEA) (b)(4) I 

9 (b)(3)_7USC i? 

10 A l(b)(4) I 

11 (b)(4) I 

12 Q So on the first page again, 987, 

13 I'm going to go back to 13:15:09, (bl(7J(CJ 

14 l(bJ(7J(CJ I says, (bJ(4J 

15 (b)(4) 

16 

17 

18 

19 ~--=o7y~o~u~u~n=e~,s~ta~n=~w=a·t"e~,s~--~ 

20 talking about there? 

21 A This is now starting to get a 

22 little away from my expertise really. I 

23 know they're generally talking about 

24 (b)(4) 

25~---------------~ 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 

Page 334 

Nowak 

2 this doesn't totally make sense to me. 

3 don't really understand it that way. 

4 Q tb)(4) 

5 rb)(4) 

s l(bJ(4J I? 

7 A No. 

8 Q ~tb")(4")--------~ 

9 lb)(4) 

1 Q(b)(4) 

11 A I'm trying to see if I can 

12 figure anything out. Give me one more 

13 second. It could mean a couple of different 

14 things. 

15 Q Which are? 

16 A b)(4) 

17 (b)(4) 

18 

19 

20 

21 

22 

23 

24 

25 ~----------------

Page 335 

1 Nowak 

2 Q fb)(4) 

3 A fbJ(4) 

4 Q What does that mean? 

5 A fb)(4) 

; rb)(4) 

9 Q On the beginning of the next 

10 page, 988, it actually starts on the 

11 previous page, (bl(7J(CJ lsays,l(bl(4l I 

12 (b)(4) 

13 (b)(4) 

14 

15 i...~~-~--------~ 16 (b)(4l I? 

17 A Correct. 

18 Q ~b~)(4~)----------

19 (b)(4) ? 

b)(4) 20 A 

21 (b)(4) 

22 ~~-~----~--~~-cc--' 23 Q In your experience, what would 

24 cause that, market conditions? What would 

25 cause that? 

Pages 332 - 335 
Page 336 

1 Nowak 

2 A l(b)(4) I 

(b)(4) 3 

4 

5 

6 

7 MR. RAISLER: fb)(4I I 

(b)(4) 8 

9 

10 

{b)(4) 11 I? 

12 THE WITNESS: (bl(4I 

13 b)(4) 

14 

15 

16 

17 

18 

19 

20 

21 0 If I can turn your attention to 

22 page ending 990, about a third of the way 

23 down at 15:44:29,l(bl(7J(CJ lsays-_b'-'153-[7~ 

24 (b)(3) 7 USC §12 (CEA) (b)(4) 

25 (b)(3)7USC §12 trC:/\\ fh\fA\ 

Page 337 

1 Nowak 

2 

3 l~b/3l(b)( b)(3)7USC §12(CEA) (b)(4) 

4 A No, b)(3) 7 USC §12 (CEA) (b)(4) 

5 l(b)(3)7USC §12(CEA) (b)(4) I 

6 0 Further down on that page 

7 starting at 16:46:41, Mr.l(bl(7J(CJ lsays, 

8 (b)(4) I 

9 (bl(4l I Andr -, I replies, 

1 Q (b)(4) 

11 

What does that mean to you? 

12 

13 ~------------~-~ 

14 A The first statement makes sense, 

15 that says, fb)(4I I 

16 (b)(4) 

17 

18 

19 

20~---------~=--~--~ 

21 Q The oart that savs. fbI(4I I 

22 (bl(4I I what could 

23 that mean? 

24 A If you are asking what it could 

25 mean it could mean that they are talking 

Page 338 

Nowak 

2 about bJ(4l 

3 b)(4) 

4 ,-,,,,,...----,--,,--,-,c----,-,--c-c-~ 

5 bJ(4l . But the problem is I 

6 don't understand what the first part says, 

7 so therefore, this kind of gets confusing in 

8 the second half. 9 Q ~fb~)(4~)~------~ 

10 fbI(4) I? 

11 A That's the flaw, that's what I 

12 don't understand about it. That's kind of 

13 an illogical sentence to me unless there is 

14 something there that I'm misunderstanding, 

15 but I can't figure this one out. 

16 0 Going to the last page of this 

17 exhibit, page 991, the last two passages. 

18 (bJ(7J(CJ says, bJ(4J 

19 (b)(4) 

20 (b)(4) b)(7)(C) says, b)(4l 

21 (b)(4) 

22 A I might have to go back a little 

23 bit to see if I can put this into context. 

24 The problem is that this passage starts with 

25 things that don't make sense. 

Page 339 

1 Nowak 

2 (b)(4) 

3 

5 

4 -~-----~------~ (bl(4l that doesn't make sense. 

6 I don't know what that means. 

7 Q What does fbI(4I 

8 l(bl(41 I mean? ~----~ 

9 A It doesn't make sense to me. 

1 O don't know. 

11 0 Do you understand fbl(4l 

12 !(b)(4) I? ~--~ 

13 A Not really. I mean those 

14 individual words mean stuff. K"b~l("4I--,, 

15 b)(4) 

16 

17 

18 

19 

20 

21 

22 EXAMINATION BY MR. SMITH: 

23 0 Do you know what they are doing 

24 generally here? cb_l(_4I ______ ~ 

25 fb)(4) t? 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 336 - 339 
Page 340 Page 342 

1 Nowak Nowak 

KbJ(4) 2 A I 2 Q The financial crisis in 2008? 

3 (b)(4) 3 A It was the financial crisis 

4 4 peak, right around that time. 

5 5 MS. RYALL: Let's mark this, 

6 6 please. 

7 7 (Instant message exchange was 

8 8 marked as Commission's Exhibit 27 for 

9 9 identification, as of this date.) 

10 10 MS. RY ALL: For the record, this 

11 11 is an eight-page exhibit. The first 

12 12 page is marked with Bates number JPM-AG 

13 13 00106037. 

14 14 THE WITNESS: Okay. 

15 15 Q This is Exhibit No. 27. Again, 

16 16 do you recognize what this document is? 

17 EXAMINATION BY MS. RYALL: 17 A It's an instant Bloomber 

18 0 Going back to the second page, 18 messa e between (bl(7J(CJ and l(bl(7l(I 

19 (b)(7)(C) 19 988. 

20 Q At the very top it's dated 20 A ~O~kma~·--~ 

21 0 (bJ(7J(CJ says, tbJ(4J 21 October 19, 2008. 

22 (b)(4) 22 A Yes. 

23 23 Q r-b-)(7-)(_C_) ---1, where is his 

24 24 usual office? 

25 ~--T;h~e-n~(b-1(7-1(-c1---~s-a-y-s,~b-l(~,1-~~ 25 A London. 

Page 341 Page 343 

1 Nowak 1 Nowak 

2 Q Can you tell from their ~ l(b)(4) 3 conversation and the time stamps what time 

4 zone these time stamps are in? 

5 fb)(4) I? 5 A London. 

6 A No. I don't actually even 6 Q London? 

7 necessarily think that the two comments are 7 A London. 

8 related, believe it or not. 8 Q Why do you say that? 

9 Q :(b)(4) 9 A Because l(bJ(7J(Clat the very end 

10 !(b)(4) _ r 10 leaves at 17:08, which would be 5:08 his 

11 A b)(4) 11 time, which makes sense about, what time he 

12 (b)(4) 12 would normally leave. 

13 Q And on the first page, 037, if I 13~~---------~-------~ 

14 Q As I said that I was suddenly 14 can direct your attention to the time 

15 recalling,.·c.-,---------~ 15 9:52:55. 

16 A fb1(4) 16 A Okay. 

17 EXAMIN"A~T=1o=N~B~Y~M~R=.~s=M~1=T~H~: ~ 17 Q And"'b~l(7~1(C~l--~is responding 

18 Q What was going on? 18 to (bl(7J(CJ 's question,~l(b_l(_41 __ ~ 

19 A (b)(4l 19 fb)(4) I 

20 (b)(4) 20 A Yes. 

21 21 Q It says, l(bl(41 

22 22 fb1(4) 1 

23 23 A Yes. 

24 Q What do those numbers represent? 24 ~-------------~ 25 EXAMINATION BY MS. RYALL: 25 A fb1(4) I 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 340 - 343 
Page 344 

1 Nowak 

2 (b)(4) 

3 

4 

5 

6 

7 0 Andl(bl(41 lmeans --

8 A fb)(4) I 

g (b)(4) I 

10 0 l(b)(4) I 

11 (b)(4) I 

12 l(b)(4) 

13 A ii l(b)('I 

f0)(4) 

17 

17 0 A couple of lines down at 

18 9:54:1 bJ(7J(CJ says, ~fb"l(4"1--, 

19 (b)(4) What does that mean? 

20 A (b)(4) 

21 (b)(4) 

22 

23 

24 

25 

Page 345 

1 Nowak 

2 ~(b"")("4) ___ .:_==-'-----------,I 

3~~_,=,------,,.-----~ b)(4) 4 0 i? 

5 A b)(4) I 

6 (b)(4) 

7 

8 

9 

10 

11 

12 

13 

14~---------------~ 

15 EXAMINATION BY MR. SMITH: 

16 Q (b)(4) ? 

17 A (bl(4l 

18 b)(4) 

19 EXAMINATION BY MS RYALL· 

20 0 He's sayingfbl(4l 

l(b)(4) 21 

22 l(b)(4) 

23 A Correct. b)(4) 

24 rb)(4) 

25 

Page 346 

Nowak 

2 Q The next page ending 038, almost 

3 in the middle at 9:56:52, i{bJ(7J(Cl I 

4 says, "I am waiting to speak to Bournouth," 

5 B-O-U-R-N-O-U-T-H, "later about it, too." 

6 And then he says, fbl(4l 7 

7 !{b)(4) r 

8 Do you know what he's talking 

9 about there? 

10 A Bournouth is a typo for 

11 Bournmouth, which is where our mid office 

12 people work. 

13 0 Is that a city? 

14 A It's a city in England. 

15 Q It's the middle office? 

16 A Yes. A lot of our support 

17 functions work out of therel(bJ(4l ~~--~ 

18 Kb)(4) ! 

19 Q He says, i(bl(41 

20 (b)(4) 

21 (b)(4) 

22 A bJ(4l 

23 Q \,b-,,)(")-'--------~ 4

24 (b)(4) ? 

25 A It doesn't really say. 

Page 347 

1 Nowak 

2 Q KbJ(7J(CJ I says something 

3 about~tb"l(4"'1 ====a--=-'='--'-'-----'-'-----'al 

4 l(b)(4) 

5 A fb)(4) 

6 KbJ(4) 

7 Q So you can't tell from this 

8 conversation what he is referring to? 

9 A Not 100 percent, no, I can't. 

10 (b)(4) 

11 

12 Q Moving to the page ending 039, 

13 at the top at 11 :11 :51 bJ(7J(CJ says, 

14 (b)(4) Do 

15 you know what he's referring to ? 

16 A fb1(4) I 

17 0 fb1(4) I? 

A 

19 Q Why does he call it that? 

20 -~A~~b~)(4~) ________ _,_~ 

21 (b)(4) 

18 ----~ Yes. 

22 

23 Q b)(4) ? 

4 24 =~A-'-----=S~o~t~h~a~t~re~fe~r~s~t~o_-~-(-bl-(-1==-----, 

25 b)(4) 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 344 - 347 
Page 34B 

1 Nowak 2 ~(b~)(4")--------------~ 

3 

4 

5 

6 

7 

8 

9 ~-;QC-c f'be,)(4,e)---------c:[,. -~ 

10 A 7S'o'l'w_o_u'ld~re-a'd'th~i-s'to-re-a'd---_~ 

11 this would mean fbl(4l 

12 l(b)(4) 

13 Q Further down that page at 

14 12:35:31, fb1(7)(C) ! says, ~vb~)(4') -, 

15 (b)(4) 

16 

17 ~-------------~ 

18 Do you understand what he is 

19 talking about in that sentence? 

20 A Parts I do. 

21 0 Okay. 22 A l~(b-)(4")~-------~ 

~:l(b)(4) 

Page 349 

1 Nowak 

2 ~(b-)(4")--------------~ 

3 

4 

5~c:c---;::.,.,-----,-----,,,---~ 

6 Q Did you say~bl(4l I? 

7 A 8 fbl(4) I ~(b~)(4") _.=a _________ ,_~ 

9 

10 ~------------~ 

11 0 Okay. 

=-~------~ 12 A fb1(41 I 

13 (b)(4) 

14 

15 

16 

17 

18 ~=o--w=h-a't's';l"((b)~(4'1-.. I'?------~ 

19=~A.:_~l-lb)-(4-I ______ L_I ___ ~ 

20 (b)(4) 

21 

22~-----------c=--.---' 

23 0 That's separate from thefbl(4I I 

24 that he 1s mentioning here? 

25 A So the first half I can -- what 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 

Page 350 

Nowak 

2 he is doina (bJ(4l I 

3 b)(4) 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14~,Q~-f"",b)'"(4'I --------.I--~ 

15 b)(4) I 

16 

17~c=o=M=E'X=?----------~ 

18 A fb1(4) I 

19 EXAMINATION BY MR. SMITH: 

20 Q He is l(bJ(4J 

21 (b)(4) 1? 

22 A fb1(41 I 

23 b)(4) 

24 

25~-------------~ 

Page 351 

1 Nowak 

2 ~b-)(4')------------~ 

3 

4 

5 

6 

7 

8 

9 ~E=X'A'M'I-NA'T=1=o'N-s=v=M=s-. =R-Y'A'LL-,--~ 

10 Q fb)(4) 1? 

11 A fb)(41 I 

12 Kb)(4) I 

13 Q fb)(4) I? 

14 A Yes,~bJ(4J I 

15 Q I 

16 ~b)(4) I 

17 A rbl(4I I 

18 (b)(4) 

19 

20 ~------------~ 21 (bl(41 I It could go 

22 either way on that. 

23 Q "'b-)(4-1 --------~I? 

24 A b)(4) I 

25 Q b)(4) r 

Pages 348 - 351 
Page 352 

1 Nowak 

2 A fbI(4I 

3 Ac--nd=tb"'l(" 41 ___ ....,l I have no idea 

4 what he means by that. BS, I have no idea. 

5 Q What would you take Lrb_)(4_I __ ~ 

6 fbI(4) I? 

7 A !(b)(4) I 

8 (b)(4) 

9 

10 

11 ~~a~~Y7 o-u~do-n~''t'kn_o_w~(b')(4') ___ r~,_-~ 

12 A No. That was years before I was 

13 at Bear Stearns. 

14 EXAMINATION BY MR. SMITH: 

15 Q (b)(4) 

16 (b)(4) ? 

17 A (b)(4) 

18 (b)(4) 

19 EXAMINATION BY MS. RY ALL: 

20 Q b)(4) ? 

21 A b)(4) '--cc--~~-~--=~ 22 0 Going to the next page, 040, at 

23 the very bottom at 14:53:18, if you can read 

24 from that line where he says, l(bJ(4l I 

25 through to the next page, the first quarter 

Page 353 

1 Nowak 

2 of the next page. 

3 A Okay. This is confusing. 

4 Q Read down to about 15:01 :40. 

5 A Okay. 

6 0 Do you understand what they are 

7 talking about there? 

8 A Mostly no, but some of it. 

9 Q Can you tell me what you do 

1 O understand. 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

A Sure. Kb)(3) 7 USC §12 (CEA) (b)(4) I 

(b)(3) 7 USC §12 (CEA) (b)(4) 

~;Ul(f~/\~/7USC §12(CEA) I 

(b)(3) 7 USC §12 (CEA) (b)(4) 

(b)(3) 7 USC §12 (CEA) (b)(4) 

(bJ(3J7usc §12(CEAJ (bJ(4l 

\~l£3J.7Y.~,,c §121 

I 

1~,.?)(71( f~lSJl 1 ~. ~ I 

land~is~~lPF~.,., 1 

Page 354 

Nowak 

2 (b)(4) 

3 

4 

5 

6 

7 

(b)(4) 8 ""'" " ' 

(b)(4) 9 1Kb)(7)(C) 1\~/\~/7USC §12(CEA) 

10 .~l£3J.7Y.~,,c §12 fbJ(4l 

b)(4) 11 

12 

13 

14 

15 0 WherehesaysKbJ(3J1usc§12 

16 b)(3)7USC §12(CEA) (b)(4) 

17 

-=-~----------~ 18 \~lSJF~·- I? 

19 A That part does actually make 

20 sense. fbl(4l I 

21 b)(4) 

22 

23 

24 

25 

Page 355 

1 Nowak 

2 b)(4) 

3 

4 

5 

6 

7 

8 

9 

10 

11 

(b)(4) 12 l~~lp),!y~ i2,"' 

13 UJ\JJ I Jb)(4) I I C: ('_ 

14 (b)(4) 

15 

16 

17 

18 a What do vou take fbl(4l I 

19 b)(4) ? 

20 A b)(4l 

21 b)(4) 

22 

23 

24 

25~--------------~ 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 352 - 355 
Page 356 Page 358 

1 Nowak Nowak 

2 (b)(4) 2 A ~b)(4) 

3 ! (b)(4) 

4 

5 5 Q Then he says, j(bl(4l 

6 6 (b)(4) 1 Do you understand 

7 7 that? 

8 8 A No. 

9 9 Q A cou le of lines down at 

10 10 14:59:36. Mr. (b)(7)(C) says, fbJ(4l 

11 11 b)(4) 

12 12 

13 13 Do you understand that? 

14 14 A The first one I do, the second 

15 ~--;c;------co:-=====-=e====a,-~ Q S fb)(3)7USC§12(CEA)(b)(4) 15 one I don't. I 

16 l(b)(3) 7 USC ~12 (CEA) (b)(4) rr 16 Q What does the first one mean to 

17 A Right. 17 you? 

b)(4) 18 Q Because? 18 A 

~~-------~ 19 A l(b)(4) I 19 (b)(4) 

20 (b)(4) 20 

21 21 

22 22 

23 23 

24 24 Q What would normally (bl(4l 

25 25 l(b)(4) I refer to? 

Page 357 Page 359 

1 Nowak 1 Nowak 

2 (b)(4) 2 A fbI(4I 

3 3 (b)(4) 

4 4 

5 5 

6 6 

7 7 

8 8 

9 Q Does it refer generally to 9 

10 l(b)(4) 10 

11 .(b)(4) I? 11 

12 A That's kind of a -- I don't know 12 Q Further down on that page near 

13 if I would necessarily say that's exactly -- 13 the bottom at 15:45:52. KbJ(7J(CJ I says, 

14 no, I would rather stick with my kind of 14 "I can take j(bJ(3) 7 USC §12 (CEA) (b)(4) I 

15 explanation, which may be convoluted and 15 A Okay. 

16 long. 16 Q It sounds to me like he is 

17 Q On the top of the next page 17 b)(4) !(b)(7)(C) I 

18 continuin that same line, it sa s, (bJ(4l 18 A Yes. 

19 (b)(4) 19 Q Do they do that? 

20 20 A They can, because fbJ(7J(CI~ 

21 ~~A~~Y-es-.-------~ 

22 Q What is fbI(4I f ~; rb)(4) 

23 A !(b)(4) 

24~ 

25 Q ~fb_)(4_) --~I? 25 Q So they arel~(b~l(4~I----~ 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 356 - 359 
Page 360 

1 Nowak 

2 ~I(b~)("4I-~l'I 

3 A fbI(4I 

4 l(b)(4) 

5 Q The top of next page ending in 

6 042, very first line at 15:49:44, l(bJ(7J(CJ I 

7 l(bJ(7J(CJ I says, fbl(3J 1 us c §12 (CEAJ (bJ(4J 

8 (b)(3) 7 USC §12 (CEA) (b)(4) I 

9~--=-~---~--~-~ 

1 O What do you understand that to 

11 mean? 

12 A l(b)(4) I 

13 (b)(4) I 

14 (b)(4) [b)(7)(C)I 

15 (b)(3) 7 USC §12 (CEA) (b)(4) 

16 

17 (b)(3)7USC §12(CEA) (b)(4)arb)(7)(Cll\~J(3)7USC §12 

18 (b)(3) 7 USC §12 (CEA) (b)(4) lb)(7ll(b)(3) 7 I _ II C, r ~1 ') 

19 (b)(3) 7 USC §12 (CEA) (b)(4) 

20 

21 

j(bl(4) 22 Q I 

23 (b)(4) I? 

24 A I'm rea11, y not sure what he 

25 means by that. 

Page 361 

1 Nowak 

l(b)(4) 2 Q I 

3 A That part meansf?l(3l 7 us c §12 rC:/\\ fh\fA\ I 

(b)(3) 7 USC §12 (CEA) (b)(4) 4 

5 

6 

7 

l(b)(4) 8 Q I 

9 I(b)(4) I 

10 (b)(4) fb)(7)(C) f{ 

11 A Yes,l(bJ(4J I 

12 (b)(4) 

13 

14 

15 

16 MS. RY ALL: It's almost 

17 1 o'clock. We do have a few more 

18 e-mails and some more questions. Do 

19 you guys want to stop at one for lunch? 

20 MR. RAISLER: Yes, that probably 

21 makes sense. 

22 MR. HAYECK: We can stop now. 

23 (Whereupon, a luncheon recess 

24 was taken.) 

25 MS. RYALL: This will be the 

Page 362 

Nowak 

2 next one, Exhibit 28. 

3 (Instant message exchange was 

4 marked as Commission's Exhibit 28 for 

5 identification, as of this date.) 

6 MS. RY ALL: We're back on the 

7 record. 

8 EXAMINATION BY MS. RYALL: 

9 Q I have handed you what has been 

10 marked as Exhibit 28. It's a five-page 

11 exhibit, and on the first page the Bates 

12 number is JPM-AG 00137848. 

13 Have you had a chance to look at 

14 that? 

15 A Yes. 

16 Q What is that document? 

17 A That's an instant Bloomberg 

18 between l(bl(71(CI landfbl(7l(CI I, and 

19 it's 1111109. 

20 Q Can you tell the zone is base on 

21 what you read? 

22 A I can assume it's London based 

23 on every other one, but let me make sure. 

24 Yes, London. 

25 Q Why do you say that? 

Page 363 

1 Nowak 

2 A t:~J(7l lioins in the room and starts 

3 talking around 6, 7 o'clock in the morning, 

4 which is 11 or 12:00 p.m. London time, and 

5 that's the time he normally. 

6 Q Let me direct your attention to 

7 a line in the middle of the first page at 

8 11:44:44. 

9 A Okay. 

10 Q r~b~)(7~)(c"'1--~lsays, ~~)~3))c:~~ c 

11 b)(3)7USC §12(CEA) (b)(4) ? 

12 A b)(3)7USC§12(CEA)(b)(4) 

13 (b)(3)7USC §12(CEA) (b)(4) 

14 

15 

16 

17 

18 ~----------------~ 

19 Q The very last statement on this 

20 statement page, at 11 :46:53 fbl(7J(CJ 

21 says, b)(3)7USC §12(CEA) (b)(4) 

22 b)(3) 7 USC §12 (CEA) (b)(4) 

23~-------------~ 

24 A Yes. 

25 Q Do you know what he's talking 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 360 - 363 
Page 364 Page 366 

1 Nowak 

2 about in this line? 

3 A I can translate it, but I don't 

4 know what he is saying. It says ~fb~)(3~)"7~U0S°C~! 

5 (b)(3) 7 USC §12 (CEA) (b)(4) 

6 

~ ~--M-R ___ R_A_l~S_L_E_R_: _T_h_a-t's-go_o_d __ ~ 

9 Q (b)(4) ? 

b)(4) 10 A 

11 ~(b~)(~4)----'-~-------~ 

12 Q (b)(4) 

13 (b)(4) 

14 If you go to the page, the 

15 second to last page ending 851, the last 

16 statement on here at 16:07:55 bJ(7J(CJ 

17 (b)(7)(C) sa s, b)(4) 

18 A b)(4l >,.,,,~----~-=" 19 Q bJ(4l Do you know 

20 what he's talking about? 

21 A No, not at all. 

22 0 You can't tell from the rest of 

23 the conversation? 

24 A It looks like we are talking 

25 about a restaurant meeting. I do remember 

Page 365 

1 Nowak 

2 going out to dinner at this place though, 

3 because I don't know what he means by 

~ l(b)(4) 

8 MS. RY ALL: That's all for that. 

9 Mark this as number 29, please. 

10 (Instant message exchange was 

11 marked as Commission's Exhibit 29 for 

12 identification, as of this date.) 

13 Q I'm handing you what has been 

14 marked as Exhibit 29. Please take a look at 

15 that. 

16 A Sure. 

17 MS. RY ALL: It's a four-page 

18 exhibit, and at the bottom of the first 

19 page the Bates number is JPM-AG 

20 00217633. 

21 THE WITNESS: Okay. 

22 Q Ready? 

23 A Yes. 

24 0 Do you recognize what this 

25 document is? 

Nowak 

2 A Yes. It's an instant Bloomberg 

3 between l(bl(7J(CJ I and someone named 

4 l(bJ(7J(CJ I, who I'm actually not familiar 

5 with from January 22, 2009. 

6 0 And it sa s on here that rb)(7)(C) 

7 !:?}(71( lis from bJ(3J 7 us c §12 (CEAJ (bJ(4l 

8 A Yes, it does say that. 

9 0 Is that someone that J.P. Morgan 

1 0 deals with in metals? 

11 A bJ(4l 

12 (b)(4) 

13 

14 

15 ~,o)-i~~==::Jyyoouurh~awveernIBewveer'r 

16 communicated with yourself? 

17 A No. 

18 Q Have you heard of him? 

19 A No. 

20 O I direct your attention to the 

21 line on the first page that's timed 

22 13:49:54. fbl(71(CI I says, 1(bl(31, 

23 b)(3) 7 USC §12 (CEA) (b)(4) 

24 

25 

Page 367 

1 Nowak 

2 Do you understand what he is 

3 saying there? 

4 A Parts of it. So he[b)£3l 7 u 5 c I 

5 b)(3) 7 USC §12 (CEA) (b)(4) 

6 

7 L-~----cc=----,,------------' 8 Q b)(4) r 

9 A b)(3)7USC §12(CEA) (b)(4) I 

10 f'~b~)(3")"7~U0S~C~§~1,~(~C7EA~)~(b~)(~4)~,----l---

11 0 KbJ(3)7USC§12(CEA)(b)(4) I 

12 fb)(31' 

13 A b)(4) 

14 b)(4) 

15 -~---~~-~--=~-~~ 16 bJ(4l I'm not sure. That's not 

17 very clear at all. 

18 0 When he says bJ(4l 

19 (b)(4) 

20 (b)(4) ? 

21 A Usually when he saysfbJ(4J 

~~ l(b)(4) 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 364 - 367 
Page 36B Page 370 

1 Nowak Nowak 

2 ~(b")(4")------------~ 2 heard that phrase. If it is it's not one 

3 I'm familiar with. 3 ~~-~-~~-~-==,.......~ 4 Q A couple of lines down (bl(7l(Cl 4 0 Going to the line that's timed 

5 !(bl(71 I says,l(b1(41 I 5 14:30:51. 

6 A Okay. 6 A Okay. 

7 Q And then on the next age just 7 O Near the bottom of that page 

8 under the middle at 14:27:37 (bl(7J(Cl 8 fb1(71(CI !says, "Okay, not the end 

9 says, bJ(4l 9 of the world for what it's worth. ~ 

1 O (bl(4l It sounds to me as if 10 (b)(4) 

11 (bl(7J(Cl is tell in bJ(7J(Cl t t 

12 (b)(4) (b)(7)(C) b)(4 12 Do you know what he's talking 

13 (b)(4) ? 13 about there? 

14 A First of all, I guess there are 14 A I don't know what he's talking 

15 two parts to it. l(bl(4l 1 15 about, (bJ(4l L 

16 (b)(4) 16 b)(4) 

17 17 

18 18 

19 19 

20 20 ~-------------~ 

21 Q If it was about that, was that 21 

22 permissible? 22 0 On the next page ending in Bates 

23 A ~(b")(4")---------~ 23 number 635, right in the middle at 14:57:54, 

24 (b)(4) 24 !(b1(71(CI !says, "DGC,[?2\71' 

25 Do you know what that means? 25 ~-----------~ 

Page 369 Page 371 

1 Nowak 1 Nowak 

~ l(b)(4) 2 A That was the one, no, I have 

3 absolutely no idea. I was laughing when I 

4 was reading through it. I was trying to 

5 figure out what that could have meant. 

6 Q At the top of the first page, 6 have never seen that before either 

~~--~ 

7 second page, I'm sorry, which end in Bates 7 Q Then he talks about l(bl(41 I 

B 634, fbl(7l(Cl I says, lr~J(3_J 7 us c §121 ~ r)(4) 

9 l(b)(3) 7 USC §12 (CEA) (b)(4) I 

b)(4) 1 O Can you tell me what that means? 10 A I 

b)(4) 11 A ltmeansthat\~1\~/7USC§12(CEA) 11 Q I 

12 (bJ(3l 7 us c §12 (CEAJ (bl(4l I don't know 12 A I would love to know what that 

13 what that means. 13 means. I have no idea. 

14 0 You can't tell what he's talking 14 EXAMINATION BY MR. HAYECK: 

15 about based on this conversation? 15 0 You said generally it's okay, 

16 A No. I can't really -- this 16 pardon me if I'm misstating, it'sl(bl(4l 

17 conversation is very, very difficult for me 17 (b)(4) 

18 to follow as compared to all the other ones. 18 !(b)(4) I? 

19 It's not really a flow that I am used to. 19 A Kb)(4) I 

20 0 Right under that line I just 20 b)(4) 

21 mentioned they're talking about sauce, and 21 

22 l(bl(7J(Clsays, "I just poured sauce all over my 22 

23 desk." Is that another phrase that gets 23 

24 thrown around the office? 24 

25 A What's interesting, I've never 25~---------------~ 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 368 - 371 
Page 372 Page 374 

1 Nowak Nowak 

2 (b)(4) 2 (b)(4) 

3 3 

4 

5 4 b==--r,,=-------,---~ 5 (b)(7)(C) l'sl(bJ(4J I 

6 

7 

(b)(4) 6 

7 I 

8 8 EXAMINATION BY MS. RYALL: 

9 9 Q Has that happened? 

10 Q (bl(4) I 10 A No. 

11 (b)(4) 11 EXAMINATION BY MR. HAYECK: 

12 ? 12 Q What about (bJ(4l 

13 A fb)(4) 13 (b)(4) 

14 (b)(4) 17 14 b)(4) 

15 Q ~b)(4) I 15 A b)(4) 

16 l(b)(4) 

17 A 

r 

b)(4) 

16 (b)(4) 

17 

18 (b)(4) 18 

19 19 

20 20 

21 21 

22 22 

23 23 

24 Q (b)(4) 24 

25 l(b)(4) r 25 

Page 373 Page 375 

1 Nowak t Nowak 

2 A ~b)(4) I 2 b)(4) 

3 (b)(4) 3 

4 4 

5 5 

6 6 

7 7 Q fbl(4) 

8 8 b)(4) 

9 9 

10 10 

11 0 Is there any way you can better 11 b)(4) I? 

12 describe that spectrum for us, pick an 12 A fb)(4) I 

13 example, an extreme example that it wouldn't 13 (b)(4) 

14 be okay? 14 

15 A Sure I can do that. fi5iITT 15 

16 (b)(4) 16 

17 17 

18 18 

19 19 

20 20 

21 21 

22 22 

23 23 

24 24 

25 25 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 372 - 375 
Page 376 Page 378 

1 Nowak Nowak 

2 (b)(4) 2 and l(bl(7J(CJ I from )~l~3],7,~,~~ §12 who 

3 3 I'm not familiar with, and it's from 

4 4 January 23, 2009. 

5 5 Q Can you tell what time zone they 

6 6 are in? 

7 7 A It's going to be London once 

8 8 again. 

9 9 Q Why do you say that? 

10 10 A Because fbJ(7J(CJ I would not 

11 11 be at work at 6:03 p.m. 

12 12 Q You are looking at the last 

(b)(4) 13 Q I 13 page? 

(b)(4) 14 I 14 A Yes. 

(b)(4) 15 I? 15 Q Second to last one where it says b)(4) 16 A I? 16 18:03:38? 

(b)(4) 17 Q I 17 A Correct. 

18 l(b)(4) 18 Q And does our group do business 

19 A b)(4) I 19 with)~l~3]7USC §12 ? 

20 Q (b)(4) 20 A b)(4l I '-a-----J 

21 l(b)(4) I? 21 Q Can you quantify how much 

(b)(4) 22 A I 22 business ou do? """==~-------~ 23 Q b)(4) I 23 A b)(4l 

24"b~)(4~)~~-----------" 24 l(b)(4) 

b)(4) 25 A I 25~-------------~ 

Page 377 Page 379 

1 Nowak 1 Nowak 

2 b)(4) 2 Q For the record, I just want to 

3 get out a whole question. 3 Q You don't personally know who 

4 A b)(4) 4 l(bl(71(CI I is? 

5 Q ~(b~)(~4)--~------, 5 A I don't. 

6 (b)(4) 6 Q You never communicated with him? 

7 7 A Not as far as I am aware, no. 

8 8 Q Do you know if he is friendly 9 "°(b~)(4~)----~?~. --------~ 9 with l(bJ(7J(CJ I? 

b)(4) 10 A 1 O A I don't know. 

11 MS. RYALL: This will be 30. 11 Q What kind of trading activity 

12 (Instant message exchange was 12 does your rou usuall do with "b~l(""31"7-~ 

13 marked as Commission's Exhibit 30 for 13 A b)(4l 

14 identification, as of this date.) 14 (b)(4) 

15 MS. RYALL: I'm handing you what 15 ~------------J 

16 has been marked Exhibit 30. Just take 16 Q And just starting from the first 

17 a few minutes to review that. That's a 17 page and reading to the second page, about 

18 three-page exhibit with the Bates 18 halfway down, could you tell me what they 

19 number on the first page JPM-AG 19 are talking about? 

20 00217759. 20 A Like most of the stuff, I can 

21 THE WITNESS: Okay. 21 help on some. 

22 Q Do you recognize what this 22 Q Okay. 

23 document is? 23 A In the 14:50:04, ~ says he 

24 A It's an instant Bloomberg ~~ rb)(3) 7 USC §12 (CEA) (b)(4) 

25 between l(bl(7J(CJ I, who works on the desk, 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 376 - 379 
Page 380 Page 382 

1 Nowak 

2 (b)(3) 7 USC §12 (CEA) (b)(4) 

3 

4L-~-~-----=,,------,------J 

5 ="Q~~l~n~y~o~u~r ~e~xp~e~r~ie~n~c~e~, _b1.,,r4,,1 =,,,...-c_, 6 (b)(4) (b)(7)(C) 

7 (b)(7)(C) ? 

8 A 1-(b-)(4-1--------~ 

~ ~ l(b)(4) 

12 EXAMINATION BY MR. SMITH: 

13 Q DoyouknowLl(b_l(4_1 ____ J 

14 i(b)(4) I? 

15 A No. 

16 EXAMINATION BY MR. HAYECK: 

17 Q Why do you thinkl(bl(4I 

18 (b)(4) ? 

19 A b)(4) 

20 (b)(4) 

21 

22 L---------------~ 

23 EXAMINATION BY MS. RYALL: 

24 0 In your experience, what does 

25 (bJ(4l mean? 

Page 381 

1 Nowak 

2~_A __ 1~•m~n~o~t~su~r~e~·~(b_lr_41 ____ ~~ 

3 (b)(4) 

4 

5 L--,Q;;----;-W;;;--ha-,t_w_o_u.,-ld.,-y-o-u'f"'blse(41,===='-, 

6 l(b)(4) I? 

fb1(4) 7 A 

8 l(b)(4) 

9 Q And below thatLl(b~l(7~1(~C~I __ __ 

1 0 says, "Can I get a strike?" And two lines 

11 down bJ(7J(CJ says, (bl(4l 

12 (b)(4) 

13 (b)(4) 

14 A It could be, but I don't know. 

15 0 On that same line he says 

16 something about a big ,~/\~/ 1 us c §12 (CEAJ 

17 (b)(3)7USC §12(CEA) (b)(4) 

18 L--~--~-~~~~~-J 

19 Do you know what he's talking 

20 about there? 

21 A Yes, thatl\~1\~11usc §12(CEAJ 

22 (b)(3) 7 USC §12 (CEA) (b)(4) 

23 

24 

25 L_ ____________ _J 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 

2 

3 

4 

5 

6 

7 

8 

9 

10 

1 1 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Nowak 

(b)(3) 7 USC §12 (CEA) (b)(4) 

Q What does the,~1PF efer to? 

A b)(3) 7 USC §12 (CEA) (b)(4) 

b)(3) 7 USC §12 (CEA) (b)(4) 

0 And would this be (bJ(3J 7 

(b)(3)7USC §12 """ trC:/\\ fh\f 

A b)(4) 

(b)(4) 

Q Where do you fbl(4l I 

b)(4) 

fb)(4) A I 

b)(4) 

b)(4) (b)(4) t~l~3)7,~,~:=: §12 

b)(4) 

b)(4) l(b)(3)7USC §12 

(b)(4) 

I 

Page 383 

Nowak 

Q So where would in that examole 

(b)(3)7USC §12 1[b)(4) cr-rh> ck,cn 

(b)(4) ? 1

A b)(4) I 

(b)(4) 

Q b)(4) I 

KbJ(4) I? 

A fb)(4) I 

b)(4) 

Pages 380 - 383 

I 
Page 384 Page 386 

1 Nowak Nowak 

fb)(4) 2 I 2 What does that mean? 

(b)(4) 3 a I 3 A I'm not sure. 

4 (b)(4) I 4 Q What does"'fb"ll4"1---~I mean? 

l(b)(4) 5 , .. " " P. 5 Does that make any sense? 

6 A fb)(4) 6 A Not really. I 

7 (b)(4) 7 EXAMINATION BY MR. HAYECK: =....--~ 8 8 Q Have you ever heard (bl(4l 

9 9 b)(4) ? 

1 0 1 0 A That sounds generally familiar, 

11 11 but it's not really -- I don't know, it's 

12 12 not a -- I don't really use it too much. 

13 13 That does ring a bell, yes. 

14 14 Q Is it a term you would use? 

15 15 A No. 

16 16 EXAMINATION BY MS. RYALL: 

17 17 Q I'm going to the paragraph at 

18 18 17:28:04, if you can read over that, what 

19 19 fbJ(7J(Cl lwrote. 

20 a How is that11 '"' 11 "" 1 I 20 A Okay. 

(b)(4) 21 I? 21 Q The first question is he says, 

rb)(4) 22 A 22 "Dude, I'm longl(bJ(3J7usc §12(CEAJ (bJ(4l 

23 (b)(4) 

I 

23 !(b)(3) 7 I 

24 24 A Okay. 

25 25 Q What does that mean? 

Page 385 Page 387 

1 Nowak 1 Nowak 

2 (b)(4) 2 A fb1(4) 

3 Q b)(4) ? 3 l(b)(4) 

\,,-..~---------'-, 4 A (b)(4) 4 0 That's $12? 

5 (b)(4) 5 A fb1(4) I 

6 6 Q 2,000 lots, is that somethin 

7 7 you would expect (bl(7J(CJ to be 

8 8 trading? 

9 A r~,b~)(3~)=,~u~s~C~§~l=2~(C~EA=)~(=b1=1,~1---~I 9 

10 10 b)(3)7USC §12(CEA) (b)(4) 

11 11 

12 12 

13 13 

14 14 

15 15 ~------------~ 

16 Q What is he talking about in the 16 ~~~=--------~~ 17 Q (b)(4) 17 rest of this paragrap;ch?.c.,,.~~-~ 

18 (b)(4) 18 A Sohesays.1)~1~3

1,7,~,~~§12 1 

19 (b)(4) 19 1(b)(3)7USC §12(CEA) (b)(4) I 

20 A (b)(4l 20 l(bJ(3J 1 us c §12 (CEAJ (bJ(4J I That's pretty ~-~ 

21 Q Looking at the very bottom of 21 self explanatory. f~/\~11usc §12(CEAJ I 

22 this page, at 14:53:52. 22 b)(3) 7 USC §12 (CEA) (b)(4) 

23 A Yes. 23 

24 Q 1~(b=)(7=)(=c1----~1 says, fb1(4) 24 

25 l(b)(4) I 25 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 384 - 387 
Page 388 Page 390 

1 Nowak 

2 0 Who is the person on the floor 

3 that you guys deal with? 

4 A I use l(bJ(7J(CJ 

~---~ 5 Q We touched on that vesterdav. 

6 A (b)(4I I 

7 (b)(3) 7 USC §12 (CEA) (b)(4) I 

~ ~-o~~b.-)£3-1~~'~-u~.s~c-T r.-----~ 

10 A b)(3)7USC§12(CEA)(b)(4) I 

11 ~(b-)(-3)~,-u~s~C-§_1_2-(C~E-A)-(-b)-(4_) ______ _,_~ 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 ~---------------~ 

Page 389 

1 Nowak 

(b)(3) 7 USC §12 (CEA) (b)(4) 2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 (b)(3)7USC §12 1':,".'.'1~)(3_)7USC §12 cr-rh> ck,cn I 

13 (b)(4) 

14 

15 

16 O Further down at 17:43:36, 

17 l(bJ(7J(CJ lsays,,~1~3)7 ,~,~;=: §12 

18 (b)(3)7USC §12(CEA) (b)(4) 

19 ~-------===~ 20 Is he talking aboutfbI(4I p 

21 A Where is this? 

22 0 17:43:36, 

23 A fbI(4) I 

24 0 Is he talking aboutf~b"l(4"I~ 

25 l(b)(4) I 

Nowak 

2 A b)(4) 

3 !(b)(4) 

4 Q And fbJ(3) 7 USC §12 (CEA) (b)(4) 

5 (b)(3) 7 USC §12 (CEA) (b)(4) 

6 (b)(3) 7 USC §12 (CEA) (b)(4) 

7 A b)(4) 

8 !(b)(4) 

9 0 fbI(4) 

10 (b)(4) 

11 

12~ 

13 A No. 

14 Q No l~,(b-I(-4I-" ('? 

15 A KbJ(3)7USC§12(CEA)(b)(4) I 

16 b)(3)7USC §12(CEA) (b)(4) 

17 

18 

19 

20 ~-0--r-1-he_w_a_s-r(-bl-(4_1 _____ __, 

21 l(b)(4) I 

22 (b)(4) r 

23 A 

24 b)(4) I 

25~--------------~ 

Page 391 

1 Nowak 

2 l(b)(4) 7 

3 EXAMINATION BY MR. HAYECK: 

4 0 The next line down there at 

5 17:49:07. 

6 A Okay. 

7 0 Just review that, and it refers 

8 tol(bl(4I fb)(71(CI I 

9 A That actually says "when you get 

10 a sec call." When you get a second call 

11 (bJ(7J(CJ whoever that is, (bl(4l 

12 (b)( b)(4) 

13 You got me on that one, but it's not SEC as 

14 in Security And Exchange Commission. It's 

15 sec as in second. 

16 O Do you know who l(bl(71(CI lis? 

17 A No. 

18 0 And the following line says, 

19 (bJ(7J(CJ sa s, makes reference to a 

20 (bl(4l Do you know 

21 what that means? 

22 A Absolutely no idea. It's funny 

23 though. 

24 EXAMINATION BY MS. RYALL: 

25 0 Did you ever hear"'l(b"'l(ae71ea(Cs-l--~ 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 388 - 391 
Page 392 Page 394 

1 Nowak 1 Nowak 

2 referred to as ""fb~l(4""1 =--~I? 2 ~that must mean it's about 2:00 or 2:30 

3 A No, that's one I'm not familiar 3 in the afternoon, New York time, which 

4 with. 4 corresponds to 19:36:55, which is 2:30 in 

5 EXAMINATION BY MR. SMITH: 5 the afternoon New York time. 

6 Q Does fbl(7J(CJ l(bJ(4l 6 0 On the very first page at 

7 i(b)(4) I? ~-~----~ 7 13:46:27. 

8 A I'm sorry? 8 A Okay. 

9 Q b)(4) 9 Q Could you explain to me what 

10 !(b)(4) I? 1 O he's talking about there? 

11 A r,1(,1 I? 11 A He is talking about l(bJ(3J 7 us c I {(b~)(~4)---~-----~ 12 (b)(3)7USC §12(CEA) (b)(4) 12 0 

(b)(4) 13 A I 13 Q What does bJ(4J 

14 (b)(4) 14 meantoyou? ~------~ 

15 15 A bJ(4l 

16 16 (bJ(4l I shouldn't be speculating 

17 17 on general English language stuff, but I can 

18 18 say that with pretty high confidence that's 

19 what he is saying there. l(bl(4l l 19 ~--------------~ 

20 Q The last stack. We will have 20 l(b)(4) I 

21 this marked as the next exhibit, No. 31. 21 Q He says they are fbl(4l 

22 l(b)(4) I ~--~ 22 A What was the date of the one we 

23 just looked at? 23 A That meanslL(b_l(4_I _____ ~ 

24 Q On Exhibit 30 it was January 23, 24~ 

25 2009. 25 Q Why would he (bJ(4l 

~------~ 

Page 393 Page 395 

1 Nowak Nowak 

=---~I? 2 A Okay. 2 !(b)(4) 

fbI(4) 3 (Instant message exchange was 3 A 

4 [(b)(4) 4 marked as Commission's Exhibit 31 for 

5 b)(4) identification, as of this date.) 5 Q 

6 MS. RY ALL: This is a four-page 6 (b)(4) 

(b)(4) 7 exhibit. At the bottom right-hand 7 

b)(4) 8 corner of the first page it has the 8 A 

9 Bates number JPM-AG 00218164. 9 (b)(4) 

10 THE WITNESS: Okay. 10 

11 Q First of all, what do you 11 

12 recognize this document to be? 12 

13 A It is an instant Bloomberg 13 

14 betweenl(bl(71(CI I and"l(b~l(7~1(C~I-~ 14 

15 from January 27, 2009. 15 

16 O And just looking at the 16 

17 conversation and the time stamps, what time 17 

18 zone do you believe this is in? 18 Q Does it (bJ(4l I?~-------~ 19 A It is London. 19 !(b)(4) 

20 0 Why do you say that? 20 A b)(4) 

=~-------~ 

21 A Because they talk about (bJ(4J 21~ 

22 (b)(4) 22 Q On the second page ending 165, 

23 Q What page is that? 23 second line down, (bJ(7J(CJ says at 

24 A On the last page, the third from 24 14:08:41, b)(4) 

25 the last one. l(bl(4I I 25 (b)(4) 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 392 - 395 
Page 396 

1 Nowak 

2 A Yes. 

3 a What does (bJ(4l mean? 

A (b)(4) 4 

5 (b)(4) 

6 Q i(b)(4) 

7 i(b)(4) I? 

8 A Yes. 

9 Q l(b)(4) 

10 l(b)(4) I? 

11 A It's impossible to sayl(bJ(4l 

12 (b)(4) 

13 

~~-~------~~~~ 14 Q The next page ending 166, near 

15 the bottom, at 16:29:11 ,!(bl(71(CI 

16 says, fbJ(3J 1 us c §12 (CEAJ (bJ(4J I ~~ rb)(3)7USC§12(CEA)(b)(4) 

1 

19 Do you understand what he is 

20 talking about there? 

21 A The first part I do. ~b)£3l!~~,sc I 

22 (b)(3) 7 USC §12 (CEA) (b)(4) 

~ 

24 -=~----------~ 

25 \~1.P~\ 1 ,., I But the second half I'm not as 

Page 397 

1 Nowak 

2 sure. I don't know what that is. 

3 Q What would happen llliR±O 

4 l(b)(4) 

5(b)(4) I? 

6 A ,~,b")(4")--------~, 

7 (b)(4) 

8 

9 

10 

11 ~~Q~.,~,b)~(3~)7~U's=c0§"12~(7CE~A")"(b~)(7'4)--~I--~ 

12 ~b)£3)!~~,s,:,,., i(b)(7)(C) f~)~3)7,~,~:=: §121 

13 (b)(3)7USC §12(CEA) (b)(4) 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Page 398 

Nowak 

2 What is he talking about there? 

3 A He is discussingm 

4 b)(3) 7 USC §12 (CEA) (b)(4) 

5 

6~----------~=~~-~ 7 Q What does he mean by fb1(41 I 

8 ~b)(4) (? 

9 A He 1s talking about the 

1 Q b)(4) 

11 

12 Q What is he saying would happen? 

13 A fb1(4) I ~ ~ rb)(4) 

16 Q How would that~bJ(4l I 

17 l(b)(4) I 

18 (b)(4) r. 

b)(4) 19 A I 

20 b)(4) 

21 

22 

~ 

24 

25 

~--------------~ 

Page 399 

1 Nowak 

2 (b)(4) 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 396 - 399 
Page 400 

1 ~----~N~o~w~a~k~--------~ 2 b)(4) 

3 

4 

5 

6 

7 

~~-Q~-~S-_w_h_a_t-,s-he-s-ay-,-n-g_h_e-,e-,---~ 

10 (b)(4) i? 

fb)(4) I 11 A 

12 (b)(4) 

13 

14 

15 ~~-~~--~~--~--~ 16 0 So it seems that he is writinn 

17 tol(bJ(7J(CJ l(bJ(4l I 

18 (b)(4I I 

19 A fb1(41 I 

20 (b)(4) I 

21 ~------------~ 

22 0 Do you know if this actually 

23 happened, what he's proposing here? 

24 A l(b)(3) 7 USC §12 (CEA) (b)(4) I 

25 }~lp~1 

Page 401 

1 Nowak 

2 Q If he had written this to you, 

3 what would your response have been? 

4 A I actually would have said -- f:bJ(4I 

5 (b)(4) 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Page 402 

Nowak 

2 b)(4) 

3 

4 

5 

6 

7 

8 ~~-~----------~ 

9 0 Could you explain to me again, 

10 you kind of touch on it, if he's 

t t i(b)(4) 

t 2 [lb)(4) I? 

13 A fb)(4) 

14 (b)(4) 

15 

16 

17 

18 

19 ~--------------~ 

20 EXAMINATION BY Mi!-Res· ,eSg.Me,I \c/c~ 

21 0 You said Mr. bJ(7J(CJ bJ(4l 

22 ~b)(4) I? 

23 A fb1(4) 

24(b)(4) 

25 MS. RYALL: We will mark this as 

Page 403 

1 Nowak 

2 nun.:iber 32. 

3 (Instant message exchange was 

4 marked as Commission's Exhibit 32 for 

5 identification, as of this date.) 

6 THE WITNESS: Okay. 

7 MS. RYALL: This is a three-page 

8 exhibit, and at the bottom right-hand 

9 corner of the first page it's Bates 

10 stamp number JPM-AG 00220442. 

11 0 Actually, the first page, if you 

12 look at the time stamp 12:52:40, it is in 

13 answer to my earlier question about what DGC 

14 means. It says, "Don't get cocky." 

15 Have you heard ~tb_ll7_1(_c_1 -~ 

16 (b~11,~11~c~1 say that before? 

17 No, that's the first time. 

18 0 Is he known for being cocky? 

19 A I wouldn't say that really, no. 

20 0 Skip to the last page, Bates 

21 number ending 444, start at the time stamp 

22 18:21 :07 and read until the end. He starts 

23 out saying,~lb_ll_41 _______ ~ 

24 A Okay. 

25 0 What is he talking about in 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 400 - 403 
Page 404 Page 406 

1 Nowak Nowak 

2 (b)(4) 2 these passages? 

3 A Some of it I understand. First 3 Q The second to last line sa s, 

4 4 (b)(4) part, fbl(4l 

5 l(b)(4) 5 

6 EXAMINATION BY MR. HAYECK: 6 

7 a Can we start with the previous 7 What does that mean? 

8 entry, just put it in that context. 8 A I wish I could tell you that. 

9 A To understand that I have to go 9 don't know. 

1 O back a little bit more. I don't know what 10 Q Did ou ever hear (bJ(7J(CJ 

11 b)(7)(C) (b)(4) that line ahead of it means. 11 

12 Q Which line are you referring to? 12 A No. 

13 A 16:58. That doesn't make sense. 13 Q You never heard him say (bJ(4l ? 

14 0 If you look a few lines 19:45:29 14 A I have heard him say (bJ(4l 

15 up through 45. 15 (b)(4) 

16 A Okay. 16 

17 Q Does that provide any context? 17 

18 A I was look at above actually 18 0 Do you know what context he used 

19 because he talks about bJ(4l 19 it in? 

20 (b)(4) 20 A He was fbJ(4l 

21 ~~ rb)(4) 

22 

23 23 0 Did you hear it often from him? 

24 24 A Here and there. 

25 25 MS. RY ALL: We will mark that as 

Page 405 Page 407 

1 Nowak 1 Nowak 

2 EXAMINATION BY MS. RYALL: 2 Exhibit 33. 

3 a What is he talking about in the 3 (E-mail was marked as 

4 next couple of passages? 4 Commission's Exhibit 33 for 

5 A The next thing he says,~ 5 identification, as of this date.) 

~ I 6 Q I'm handing you what has been (b)(4) 

7 marked as Exhibit 33. It's a one-page 

8 (b)(4) KbJ(7)(C)I 8 document with a Bates number JPM-AG 

9 " , Isays. This whole exchange is random, 9 00237733. Could you tell me what this is? 

1 O weIra. I don't know what they are saying. 1 O A It's an e-mail from l(bl(7J(CJ I 

11 Q At 18:21 :51 fb)(7)(C) I 11 tol(bJ(7J(CJ [, sent on October 15, 2009. 

12 sa s, (b)(3)7USC §12(CEA) (b)(4) 12 Q Do you know whofbl(7J(CJ I is? 

13 (b)(3)7USC §12(CEA) (b)(4) 13 A I have heard of him, but I never 

14 A Right. 14 met him. 

15 Q K"b~)(~3)"7~U0ScC~§~l02"(C7E"A)~(~b)"'(4')--"I(. 15 Q Do you know where he works? 

1B ~b)£3l!~~,sc D 16 A At a hedge fund, but I don't 

17 A fb1(41 I 17 know what the name of the hedge fund is. 

18 (b)(4) I 18 Q Is it a fund that your group 

19 Q l(b)(3)7USC§12(CEA)(b)(4) I 19 does business with? 

20 (b)(3) 7 USC §12 (CEA) (b)(4) I 20 A I don't know. 

21 I\~l~3J7,~,~c §12 r? 21 Q Do you know if he is friends 

22 A fb)(4) 22 with l(bl(71(CI I? I 

23 (b)(4) 23 A I believe they are, yes. 

24 24 Q You might have mentioned this 

25~--------------J 25 earlier, but do the other traders call 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 404 - 407 
Page 40B Page 410 

1 Nowak 

2 l(b)(7)(C) I? 

3 A That's correct. 

4 0 If you read the e-mail from 

5 l(bJ(7J(CJ I to ~l(b_l(_71_(c_I ----~ 

6 says, "Hold on to your hat today. I have my 

7 lead pipe out in silver." 

8 What does that mean? 

9 A He thinks it's going to go 

1 0 lower. 

11 0 What does him having a lead pipe 

12 mean? 

13 A I think the terminology 

14 originated from like beating something over 

15 the head with a lead pipe, but it's commonly 

16 used to say you think something is going 

17 lower. 

18 0 Have you heard him say that 

19 before? 

20 A Yes. 

21 0 Do other traders use that term? 

22 A Yes, I have heard that before, 

23 yes. 

24 0 Who else have you heard say 

25 that? 

Page 409 

1 Nowak 

2 A I'm not sure, just generally. 

3 O Do you use that term? 

4 A No. Actually, going back to one 

5 other thing, when you asked me whether or 

6 not I used the term, like actually you asked 

7 me about~ I should probably clarify. 

8 I should, especially with that, I don't 

9 think I use these words. I am trying to the 

10 best, I should qualify to the best of my 

11 knowledge. It certainly exists the 

12 possibility I have used terms like this, but 

13 I just want to make sure I answer the best 

14 way. I want to be truthful, but I also 

15 don't want to act like I said things that I 

16 don't think I said. I just wanted to 

17 clarify that. 

18 Here's the problem with this 

19 e-mail, aoina back to this, l(bl(4l I 

20 (b)(4) 

21 

22 ~-------------~ 

23 0 What does that mean? 

24 A fb1(4) 

25 l(b)(4) 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 

Nowak 

2 b)(4) I 

3 fb)(4) l(b)(7)(C) 1(b)(4) 

4 (b)(4) 

5 

6 

7 

8 

9~-------------~ 

10 EXAMINATION BY MR. HAYECK: 

11 0 Have you seen Exhibit 33 before? 

12 A I don't know. It's possible. I 

13 don't remember. 

14 Q Other than with --

15 A If I did it was with counsel. 

16 haven't seen it outside of -- it may have 

17 been one of the e-mails they showed me with 

18 counsel, but outside of that, no. 

19 Q Other than with counsel, have 

20 you had any discussions with anyone at J.P. 

21 Morgan about fbJ(7J(CJ l's use of the 

22 term lead pipe? 

23 A Not that I recall. 

24 MR. RAISLER: Should we take a 

25 short break? 

Page411 

1 Nowak 

2 MS. RYALL: Sure. 

3 (Whereupon, a recess was taken.) 

4 MS. RYALL: These will be the 

5 next exhibits. 

6 (Instant message exchanges were 

7 marked as Commission's Exhibits 34, 35 

8 and 36 for identification, as of this 

9 date.) 

10 EXAMINATION BY MS. RYALL: 

11 Q You have what has been marked as 

12 Exhibit 34. It's a four-page exhibit. The 

13 bottom of the first page shows a Bates 

14 number JPM-AG 00167051, and you have had a 

15 chance to read through that? 

16 A Yes. 

17 Q What is this document? 

18 A It's a Bloomberg chat room. 

19 Q Is it a specific chat room? 

20 A It contains J.P. Morgan 

21 employees and ~~lp),!y~ c which is a broker. 

22 Q KbJ~3J _1 us c I is a broker? 

23 A Yes. 

24 o c-rb"'l('""I -----~i? 

25 A ~fb_)(4_1 __ ~ 

Pages 408- 411 
1 Nowak 

2 a rx4C I? 

3 A~ 

4 Q Are OU familiar with rb)(7)(C) 

5 l(b)(7)(C) I 0)(7)(C) ? 

6 A I have met him before. I'm not 

7 close with him, but I know who he is. 

8 0 And he is an employee ofbbJ(3l I 

g l~~lSJF p 

10 A Yes. 

11 0 Do you know if he is friendly 

12 with any of the traders that you supervise? 

13 A I'm not sure. 

14 O I wanted to direct you to the 

15 third page ending in 053. 

16 A Okay. 

17 0 And actually, throughout this 

18 age b)(7)(C) and f-b~)(7-)(~C-) ~ 

19 (b)(7)(C) (b)(4) 

20 and near the bottom at 16:33:46 bJ(7J(CJ 

21 l(bJ(7J(CJ !says, (bJ(3J 1 us c §12 (CEAJ (bJ(4J ? 

22 A Correct. 

23 0 And three lines down rbJ(7J(CJ 

24 l(bJ(7J(CJ I says (bJ(3J 7 

II S (; S1? 

25 A Yes. 

1 Nowak 

2 Q (b)(3) 7 USC §12 (CEA) (b)(4) 

3 (b)(3) 7 USC §12 (CEA) (b)(4) 7 

b)(4) 4 A 

5 a fb)(4) 

6~ 

7~7 

8 A No. 

s a Is that~? 

10 A fbJ(3) 7 USC §12 (CEA) (b)(4) 

11 (b)(3) 7 

12 Q That's all I have on that one. 

13 A I misread what you were going to 

14 talk to me about. 

15 Q What other things do you want to 

16 talk about? The "I feel so dirty" comment, 

17 could you explain what they're talking 

18 about, on page two, ending 052? 

19 A l(bJ(7J(CJ I wrote that in the 

20 chat, and they made fun of him for the next 

21 several hours for having written that. I 

22 never really looked at this chat, but it's 

23 actually pretty funny. 

24 MS. RYALL: Gene actually has a 

25 question about Exhibit 33, so I'm going 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 

Page412 

Page413 

Page 414 

Nowak 

2 to direct your attention back to that 

3 one. 

4 EXAMINATION BY MR. SMITH: 

5 O In this e-mail fLb_l(7_I(_c_I ___ 

6 l(bl(7J(CJ I after he talks about having a lead 

7 pipe in silver he tells l(bJ(7J(CJ I to go 

8 easy at the end. Do you understand what he 

9 means by that? 

10 A No. That doesn't make a lot of 

11 sense. 

12 MR. SMITH: That's it. 

13 EXAMINATION BY MS. RYALL: 

14 O I want to jump back again to 

15 Exhibit 30 just really quick. The second 

16 page of that exhibit, which ends in Bates 

17 number 760, if you go down near the bottom 

18 the time stamp 15:31. 

19 MR. RAISLER: The second page. 

20 MS. RYALL: The second page, 

21 sorry. 

22 0 Time stamp 15:31 :46. 

23 A Yes. 

24 0 Actually, a couple before that, 

25 15:31 :26,!(bl(71(CI I says,l~bl=(,~I ~ 

Page 415 

Nowak 

2 b)(3) 7 USC §12 (CEA) (b)(4) 

3 b)(3) 7 USC §12 (CEA) (b)(4) (b)(7)(C) b)(4) 

(b)(4) 4 

5 (b)(4) b)(7)(C) says, (b)(4) 

6 (bl(4l And he sa s (bJ(7J(CJ sLa_s_J 

7 b)(4) 

B (bl(4l And (bJ(7J(CJ says, "People 

9 underestimate their sneakiness." 

10 Do you know that they are 

11 talking about there? 

12 A The only thing I know is the 

13 last sentence. I mean they're talking about 

14 tb)(4) ! 

15 fb1(41 I "People 

16 underestimate their sneakiness," that is a 

17 quote from the movie Mr. Deeds when the 

18 butler always keeps sneaking up on people, 

19 and it's a joke that is regularly kind of 

20 thrown around on the desk. 

21 Q Have you ever heardl(bJ(7J(CJ 

22 J(bJ(7J(CJ I talk about bJ(4J 

23 r,I(,I r 

24 A No. 

25 Q I am handing you what has been 

Pages 412- 415 
Page416 Page 418 

1 Nowak Nowak 

2 marked as Exhibit 35. This is a 12-page 2 at that time that would cause him to want to 

3 exhibit. The first page is a Bates number 3 do that? 

4 JPM-AG 00176306. 4 A Not that I can remember. 

5 A Okay. 5 Q Continuing on the page marked 

6 Q Do you recognize what this 6 310, a few more lines down they continue 

7 exhibit is? 7 this discussion, and (bJ(7J(CJ at 

8 A It's a Bloomberg instant messa e 8 14:18:18 sa s, bJ(4l 

9 between l(bJ(7J(CJ I and bJ(7J(CJ from g b)(4) 

1 O February 2nd of this year. 1 0 bJ(4l Then (bl(7J(CJ says, 

11 Q Can 11 (b)(4) you tell by their 

12 conversation and the time stamps what time 12 (b)(4) b)(7)(C) 

13 zone this is in? 13 bJ(7J(CJ says, "Yes." 

14 A This would be London as well. 14 Could you explain to me what 

15 0 Why do you say that? 15 they are talkin about there? 

16 A Because at the end of it. 16 =~A~~N~O~-~b-1(_41 ________ ~ 17 b)(4) 7 

17 Q On the last page? 

18 A On the last pageJb)(71 I and !(bl(71(CI 18 ~------~=~---~-~ 

19 wouldn't be talking at close to 6:00 p.m. 19 Q What would (bl(4 ~----~ l 

20 New York time. That would be too late, so 20 mean? 

21 A "b")(4"1-----------~ 21 it has to be London time. 

22 Q If you can go to the fourth page 22 !(b)(4) 

23 of the exhibit, the page ending 309, the 23 Q Is that commonly used by the 

24 very last passage at 13:40:07. 24 traders? =~------~ 

25 A Okay. 25 A b)(4l 

Page417 Page 419 

1 Nowak 1 Nowak 

2 •t:b")(4")-~ 2 Q If you can read from there 

3 through the first six of the next page. 3 Q So l(bl(41 

4 A Okay. 4 fbl(4) 

5 Q What are they talking about in 5 [bJ(4) 

6 th" Is groun o f I Ines. •6 A Usually that's tru~e"", ~ye_s_. __ ~ (b)(4) 0 7 A I 7 Q When he says bJ(4l 

8 (b)(4) I 8 b)(4) ? 

b)(4) b)(4) 9 Q I? 9 A 

10 A b)(3) 7 USC §12 (CEA) (b)(4) I 10 Q Then he says (bl(4l 

11 (b)(3) 7 USC §12 (CEA) (b)(4) 11 (b)(4) 

12 12 (b)(4) ? 

13 13 A I don't really know. 

lsthat(bJ(3J1usc §12 14 Q I 14 Q Then (bJ(7J(CJ says, bJ(4J 

(b)(3) 7 USC §12 (CEA) (b)(4) 15 P. 15 (b)(4) 

fb)(3) 7 USC §12 (CEA) (b)(4) 16 A I 16 bJ(4l ? Do you know what he means? 

(b)(3) 7 USC §12 (CEA) (b)(4) 17 17 A It's hard for me to answer, 

18 18 because I don't totally understand the 

19 19 !(b)(4) ! 

20 Q Do you know why heKbJ~3)7,~,~;=: §12 20 Q If you would please go to the 

21 (b)(3) 7 USC §12 (CEA) (b)(4) r1 21 page ending 313, the bottom at 16:10:16 

22 A I don't, no. 22 (b)(7)(C) sa s b)(4l 

23 (b)(4) 23 Q This was in February of 201 0? 

24 A Yes. 24 

25 Q Is there something that happened 25 ~--------------~ 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 416- 419 
Page 420 

1 =--- Nowak 2 l(b)(4) 

3 lain to me again 

4 how (bl(4l ? 

5 A b)(4) 

6 (b)(4) 

7 

8 

9 

10 

11 ~~-~--=--------r-' Q So OU b)(4) 

12 (b)(4) ? 

b)(4) 13 A 

(b)(4) 14 a ~---~ ? 

15 Yes. 

16 ==-~H~o~w~d~o~e~s~th~a~t~w~o~r~k~?~(_bl_(4_I __ ~ 

17~~------------~ 18 (b)(4 ? 

19 A b)(4) 

~~ l(b)(4) 

24 O After thatl(bl(71(CI I says. 

25 1(b)(3) 7 USC §12 (CEA) (b)(4) Do you know 

Page 421 

1 Nowak 

2 ~l(b"l(4"l------,I means? 

3 A l(b)(4) 

4 !(b)(4) I 

5 Q l(bl(7J(CJ I says, "Yes, 

6 (b)(4) 

7 What does that mean? 

8 A I don't know for sure, but I can 

9 venture a guess on that. 

10 a Okay. 

11 A It's probablytb)(4I 

12 (b)(4) 

13 Q So you think that pe;;,rh'cia'lii'sc'it==-, 

14 means that J.P. Mor an was\~l~3F,~,~;=: §12 

15 (b)(3)7USC §12(CEA) (b)(4) 

16 A That could be what it means. 

17 0 Is there afbl(4l I 

18 (b)(4) I 

19 ---~-----------~ 20 (b)(4l I? 

21 A fb)(4I I 

22 (b)(4) 

23 ~-~~==---,---~~~--~~ 24 MS. RY ALL: I'm handing you what 

25 has been marked as Exhibit 36. 

Page 422 

Nowak 

2 THE WITNESS: Thank you. 

3 MS. RYALL: This is a four-page 

4 exhibit. The first page has the Bates 

5 stamp number JPM-AG 00182425. 

6 THE WITNESS: Okay. 

7 Q What do you recognize this 

8 document to be? 

9 A Instant Bloomberg chat between 

1 0 l(bJ(7J(CJ I andfbl(7J(CJ I from March 9, 

t t 2010. 

12 Q Can you tell by the conversation 

13 and the time stamps what time zone this is 

14 in? 

15 A London. 

16 Q How do you know that? 

17 A It's very unlikelyi(bl(7l(lwould be 

18 trading midnight our time, but it's very 

19 likely he would be talking to :bJ(7J(C at 

20 7:00 p.m. our time or 7:00 a.m. \bl(7J(C s 

21 time. So I can't say with certainty on this 

22 one, because he could have woken up in the 

23 middle of the night, but most likely it's 

24 London time. 

25 Q And ~l(b~l(7=I(=c,I -~I is in Singapore? 

Page 423 

1 Nowak 

2 A Yes. 

3 Q If you can take a look at the 

4 bottom of the first page starting at 

5 00:20:34. 

6 A Okay. 

7 Q From there on it seems to be the 

8 same conversation. You did have a chance to 

9 read through that? 

10 A Yes. 

11 Q Can you tell me what they are 

12 talking about? 

13 A Parts of it I can. 

14 0 Okay. 

15 A The first statement, fbl(4l I 

16 b)(4) 

17 

18 

19~-a~~w=h-a~t'is~JM,b)"(4'1 --~r~_~~=,_--=--=--~ - 20 A bJ(4l I don't know. (bl(4l 

21 (b)(4) 

22 

23 ~-;:c----:,,::-----,-,---:,--------,---.,,,,,ee==-'----. 

24 0 Where would they beLfb_l(4_I --~ 

25 (b)(4) 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 420 - 423 
Page 424 Page 426 

1 Nowak 

2 ="A_c__,_Kb __ l(_4I _______ --"I'-----~ 

3 (b)(4) 

4 

5 

6 

7 

8 

9 

10 

11 ~~-~------~-~-~-~ 

12 Q Can you take me through 1t what 

13 thev are talkinr about inl(bI(4I I 

14 (bl(4l ? For example, on the 

15 first page I says, Kbl(4l I 

16 (b)(4) 

17 

18 '----~-~-~----~~--" 

19 Does that make sense to you? 

20 A The second part he'sfbI(4I I 

21 fbl(4I r The 

22 first part is unclear. 

23 Q So the second sentence you take 

24 to mean (bJ(4l ? 

25 A Yes. 

Page 425 

1 Nowak 

2 Q (b)(4) 

~---------~ 

3 A It could. Probably, but I don't 

4 know for sure 

5 Q (b)(7)(C) I is saying, fbl(4l I 

6 (b)(4) IKb)(7)(C) 1 savs, 

7 "Whatever." 1(bl(7J(CJ I says, fbl(4l I 

8 (b)(4) 

9 fbl(4) 10 A 

(b)(4) l(b)(7)(CJ(b)(4) 11 

12 (b)(4) 

13 

14 

15 Q The next line,l\~l£3J,7Y,~,,c §12 I 

16 (b)(3) 7 USC §12 (CEA) (b)(4) I 

17 What does that mean? 

18 A That's~~/\~/7Usc §12(CEAJ 1 

19 (b)(3)7USC §12(CEA) (b)(4) 

20 

21 ~-;:------,::-:,---,--c-.:,=====,-r,c--' 22 a What isf~/\~11usc §12(cEAJ I? 

23 A l(b)(3) 7 USC §12 (CEA) (b)(4) I 

24 (b)(3) 7 USC §12 (CEA) (b)(4) I 

25 Q Does that meanl(bl(4l I 

Nowak 

b)(4) 2 

3 A Yes. 

4 Q The next linefbl(7J(CJ 

5 says, b)(4) 

6 b)(4) 

7 

8 A That doesn't make sense. 

9 Q The next line says, b)(4) 

10 (b)(4) 

11 b)(4) ? 

12 A Yes. 

13 Q In our ex erience inl(bl(4l 

b)(4) 14 7 

15 A b)(4) 

16 (b)(4) 

17 Q b)(3)7USC §12(CEA) Is this 

18 7 

19 b)(3) 7 USC §12 (CEA) (b)(4) 

20 b)(3) 7 

"~ ~ ~' ~ 

21 Q Is it on GLOB EX? 

22 A Yes. l\~/\~/1usc §12(CEAJ 

23 (b)(3) 7 USC §12 (CEA) (b)(4) 

24 

25 

Page 427 

1 Nowak 

2 Q They are not talking about[bl(4l 

3 b)(4) ? 

4 A No. 

5 Q At 00:26:31, Mr. (b)(7)(C) says, 6 "(b~)(7-4)~----~~~--~~~~ 

7 (bl(4l What does that mean? 

8 A No idea. 

9 Q What is EBS? 

10 A EBS is the electronic brokerage 

11 system. It's a way to electronically trade 

12 spot. 

13 Q So thefbI(4I 

; : l(b)(4) 

16 (b)(4) I? 

17 A I can't read where they talk 

18 about anything about that, unless you see 

19 it. 

20 Q Well, a different question then, 

21 based on the way they are talking about 

22 b)(4) 

23C,,,.,.~---~-------~ 24 (b)(4) ? 

25 A b)(4) 

~---------~ 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 424 - 427 
Page 42B Page 430 

1 Nowak Nowak 2 ~(b")(4") _____________ _ 2 A bJ(7J(CJ is a client at 

3 (b)(3) 7 USC §12 (CEA) (b)(4) 3 

4 

5 

6 

7 ~--=~----------~ 

8 0 l(bl(4I I 

g (b)(4) I 

10 A Yes. 

11 0 l(b)(4) I 

12 (b)(4) I? 

13 A r 

14 (b)(4) 

15 

16 

17 

18 

19 

20 

21 ~-~M=R-. ~H7A~Y~E~C-K~:-L-e~t's-go_o_ff~th-e--~ 

22 record for a minute. 

23 MS. RY ALL: Off the record. 

24 (Whereupon, a discussion was 

25 held off the record.) 

Page 429 

1 Nowak 

2 MS. RY ALL: Back on the record. 

3 The next one will be 37. 

4 (Instant message exchange was 

5 marked as Commission's Exhibit 37 for 

6 identification, as of this date.) 

7 EXAMINATION BY MR. HAYECK: 

8 Q We are showing you Exhibit 37. 

9 For the record, it's Bates stamped JPM-AG 

1 0 00237658, and it's a four-page document with 

11 a Bates stamp ending in 661. Let me know 

12 when you have had a chance to read it. 

13 A Okay. 

14 0 What is Exhibit 37? 

15 A It's an instant Bloo[P);(@,U:h\'·t 

16 betwee~(bl(7J(CJ I and (bl(7J(CJ 

17 Q From looking at it, can you tell 

18 what time zone the entries reflect? 

19 A Interestingly, of all the ones 

20 we have looked at this one could just as 

21 easily be 8:30 in the morning New York time 

22 or 1 :30 in the afternoon New York time. 

23 There is nothing actually in the message 

24 that tells you definitively on this one. 

25 0 Who is fb1(7)(C) f 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 

4 Q Where is Discovery Hedge Fund 

5 located? 

6 A I'm not sure. 

7 0 Do you know Mr. [~(71p 

8 A Yes, I've met him before. 

9 Q Do you trade with Mr.t-:?NI? 

10 A I have in the past, yes. 

11 Q In the 2008, 2009 time frame, 

12 who on your desk interacted with Mr. f:bJ(7l( I 

13 most frequently? ==~- 14 A Probably l(bl(71(CI I the 

15 salesperson. 

16 Q What kind of business did you do 

17 with M r.~,~),(71 ? 18 A ~)'5il4f~l( _1s----________ _ 4

s------~~--~~-~ 19 Q Let me direct your attention to 

20 the second page of the exhibit, which ends 

21 in Bates stamp 659. 

22 A Okay. 

23 Q And beginning towards the bottom 

24 of the page there is a entry at time 

25 13:44:44, by Mr. ~fb~l(7J!(_bl_(4_1 ------~ 

Page 431 

1 ~--- Nowak 

2 fb1(4) 

3 A Okay. 

4 Q Can you just quickly review the 

5 remainder of the page. 

6 A Okay. 

7 0 Do you see the reference to 

8 l(b)(7)(C) I? 

9 A Yes. 

1 O O Who is that? 

11 A He was a client. 

12 Q Do you know inde endentl from 

13 what it says on here who (bl(7J(CJ is? 

14 A I would have forgotten him, but 

15 this actually jogged my memory. I think 

16 this is right, but I wouldn't have 

17 remembered him otherwise. 

18 Q With your memory refreshed, what 

19 do you know about Mr. fbJ(7)(C) r 

20 A He ran a small hedge fund. 

21 O During 2008, 2009? 

22 A I think so. I think so. 

23 Q Does he still do that? 

24 A I don't know that. 

25 Q Do you know if anybody currently 

Pages 428 - 431 
Page 432 Page 434 

1 Nowak Nowak 

2 b)(4) 2 trades with him on your desk? 

3 A ~b)(4) 3 4 Q 'l(b~)(~4)s=a--------=----" 4 

5 (b)(4) ? 5 

6 A I don't know. 6 ~--~=----------~J 

7 Q Do you know if he had any rior 7 o fb)(4I I 

8 existing relationship with (bJ(7J(CJ 8 (b)(4) I 

9 prior to the 2008 time fracm-e'?~--~ g ~b)(4) 

10 A I think they did, but I don't 10 A fb)(4) I 

11 know 11 (b)(4) for sure. I 

12 Q In this entry, can you just 12 MS. RYALL: We're actually ,n 

13 describe what's going on here for me, 13 the home stretch. I have a few more 

14 beginning with the 13:44:44 entry and 14 questions for you. 

15 running throunh the bottom of the page? 15 EXAMINATION BY MS. RYALL: 

16 A ~b)(7)(C) lsays, l(b)(4l I 16 Q Do you trade on GLOBEX? 

17 (b)(4) (b)(7)(C) (b)(4) I 17 A Kb)(4)1 

10 (bJ(4J sO~~" 1 J\'-'J 1 18 Q Have you ever observedj(5i(4il 

3 7 12 19 responds,f~1

~2 1

u ~.,c § and he says, 19 (b)(4) 1 

20 'fbl(7J(CJ ~~J~3)7,~,~;=: §12 I And that's 20 

21 not clear what that means 11 ~1111 . 21 

22 b)(4) 22 0 So when he says,{bl(4

l I V 

23 (bJ(4l I and Mr.l(bJ(7J(CJ 1\~l.P~\1,, I 23 A Onemore~t~,m~e=,=l~ea=s=e=·-, 

24 (b)(3) 7 USC §12 (CEA) (b)(4) I 24 0 Have OU (b)(4l 

25 (b)(4) 25~------------~ 

Page 433 Page 435 

Nowak 1 Nowak 1~-- 2 }~1PF ? 2 fb)(4) 

3 A Correct, yes. 3 l(b)(4) I? 

4 Q In the reference to Mr.l(bJ(7J(CJ I 4 A Not particularly, no. 

5 rb)(4) 

6 (b)(4) I? I 5 Q 

6 (b)(4) 

~b)(4) 

1? 

I 

7 A (b)(4) I 7 A (b)(4) I 

8 Q (b)(4) r 8 b)(4) 

9 A b)(4) I 9 

10 (b)(4) 10 

11 11 Q !b)(4) 

12 12 l(b)(4) f? 

13 13 A l(b)(4) I 

14 Q If Mr. bl/71/Cl (b)(4l 14 b)(4) 

15 (b)(4) 15 

16 16 

17 (b)(4) ? 17 Q Why would you do that? 

18 A (b)(4) 18 A !b)(4) 

19 (b)(7)(C) ~b)(4) 19 fb1(4) 

20 (b)(4) 20 Q Have you heard of the term 

21 21 (b)(4) ? 

22 22 A Yes. 

23 23 Q Can you tell me what that is? 

24 24 A b)(4) 

25 25 b)(4) 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 432 - 435 
Page 436 Page 438 

1 Nowak Nowak ~ l~(b~)(4~)---==~------- 2 (b)(4) ? 

3 A No. 

4 Q (b1(4) 

5 Q What do you mean when you are 5 !(b)(4) I? 

6 l(b)(4) I? 6 A No. 

7 A b)(4) 7 Q Does that bJ(4J 

8 (b)(4) b)(4) 8 

b)(4) 9 9 ? 

10 10 0. 

11 11 Q What about for bJ(4l 12 ~(b=)(4~)~-----~---~-~ 12 Q Do you know why that happens? 

13 A Yes. l(bl(4I I 13 \:,,,,,..----------,,,---~ 14~(b=)(4")----=-------a::!-~ (b)(4) 14 ? 

15 15 A No. 

16 16 Q fb)(4) I 

17 17 b)(4) 

18 18 I 

b)(4) 19 19 I? 

fb)(4) 20 20 A I 

b)(4) 21 21 

22 22 

23 23 

24 24 

25 25 

Page 437 Page 439 

1 Nowak 1 Nowak 

2 ~(b~)(4")---==~-------~ 2 Q fb)(4) I 

3 3 ~b)(4) I? 

4 4 A I don't know. ~bJ(4l I 

b)(4) 5 5 

6 6 

fb)(4) 7 7 Q I 

8 8 (b)(4) r 

9 9 A fb)(4) I 

b)(4) 

10 ~~~=------~--~ 10 

11 11 =;Q:_~fi-b)-(41-------'---I-~ 12 l(b)(4) 12 

13 .(b)(4) 13 f 

14 A Yes. 14 

15 Q Does fb)(4) it ha en often? 15 Q I 

b)(4) 16 16 A b)(4) 

17 (b)(4) 17 

(b)(4) 18 Q 18 

19 (b)(4) 19 ~? 

20 (b)(4) ? 20 A No. 

21 A (b)(4) 21 Q b)(4) 

22 (b)(4) 22 b)(4) 

23 23 24 ~-;Qcc--=b)"°(4),---------.,---~ b)(4) 24 ? 

25 (b)(4) 25 A No. 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 436 - 439 
Page 440 Page 442 

1 Nowak Nowak 

2 Q b)(4) 2 b)(4) 

~ rb)(4) 3 Q 

4 (b)(4) 

b)(4) 

5 ](b)(4) 

6 A Yes. 

I? 5 6 o-b=)(4=)---~-------~ 

7 

8 

Q 

A 

(b)(4) ? 

bc(b=)(4")-----~-~ 

7 

8 

A 

Q 

No. 

To your knowledge, have traders 

9 Q (b)(4) 9 at J.P. Morgan in the metals group put up 

1 Q (b)(4) ? 1 0 bids or offers to the market which they 

11 A (b)(4) 11 didn't intend to execute and then pulled 

12~ 12 them before they got hit or lifted? 

13 0 l(b)(4) 13 A No. 

14 l(b)(4) I? 14 Q f~'b")(4"1-------~I 

15 A Absolutely no idea. 15 Kbl(4) I 

16 Q !(b)(4) 16 fb)(4) I? 

17 !(b)(4) 17 A fbl(4) I 

18 A f{b)(4) 18 b)(4) 

19 Q l(b)(4) 19 

20 l(b)(4) 20 

21 A b)(4) I 21 

22 Q b)(4) (? 22 

23 A b)(4) I 23 ~-------------~ 24 l(b)(4) I 24 MR. HA YECK: Why don't we go off 

25 the record. We'll take five minutes, 25 ~-------------~ 

Page 441 Page 443 

1 Nowak 1 Nowak 

2 (b)(4) I 2 make sure we have all our stuff. 

(b)(4) 3 Q I 3 MR. RAISLER: I have just a 

(b)(4) 4 1? 4 couple of questions for him at the end. 

l(b)(4) 5 A 5 MR. HA YECK: That would be 

(b)(4) 6 I 6 great. 

fb)(4) 7 Q I 7 MS. RYALL: Off the record. 

(b)(4) 8 I? 8 (Whereupon, a recess was taken.) 

9 A l(b)(4) I 9 MS. RYALL: Let's go back on the 

(b)(4) 10 1 0 record. I just have one last question 

11 11 for you. 

12 12 EXAMINATION BY MS. RYALL: 

Q l(b)(4) 13 13 Q Going over some of these 

14 (b)(4) 1? 14 e-mails, Kbl(4l 

15 A l(b)(4) I 15 fbJ(4) h fb)(4) I 

16 (b)(4) 16 b)(4) 

17 17 

18 18 

19 

20 19 ~-~=---------~-~ 20 A fbl(4I I 

21 21 (b)(4) (b)(7)(C) 

22 22 

23 23 

24 24 

25 25 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 440 - 443 
Page 444 

1 Nowak 

(b)(4) (b)(7)(C) 2 

3 

4 

5 fb)(4) (b)(7)(C) 6 Q I 

7 (b)(4) (b)(7)(C) 

8 (b)(4) (b)(7)(C) 1? 

l(b)(4) (b)(7)(C) 9 A 

10 (b)(4) (b)(7)(C) 

11 

12 

l(b)(4) (b)(7)(C) 13 Q 

14 l(b)(4) (b)(7)(C) I? 

15 A fb1(41 

16 (b)(4) 

17 

18 

19 

20 ~------------~ 

21 MS. RYALL: Those are all the 

22 questions I have, but I will give you a 

23 chance to talk to him or let him 

24 clarify anything. 

25 MR. RAISLER: Just a few quick 

Page 445 

1 Nowak 

2 questions. 

3 EXAMINATION BY MR. RAISLER: 

4 0 You testified earlier today 

5 (b)(4) 

6 

7 

8 ---~------------~ (bl(4l I Could you explain why in your view 

9 that was the case? 

10 A ~bl(4l I 

11 (b)(4) 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Page 446 

Nowak 

2 (b)(4) 

3 

4 

5 

6 

7 

8 

9 l,(b~)('4)---~,b~)(7~)(~C')~ "b")(4")-------,~~ 

1 Q b)(4) 

11 

12 

13 

14 

15 

16 

Q Let me go back to the second 

17 

18 ~~--------------~ 

3 -b')(4") __ c..:_.:.:_:_:__c:..:_.:cc.::..s----aa_-~ 

19 part of what vou said 

20 testified thatfb1(41 

insofar as vou 

21 b)(4) 

22 b)(4) "' Jb)(4) I 

23 (b)(4) f? 

24 A Sorry. 

25 0 Let me rephrase the question. 

Page 447 

1 Nowak 

2 You testified thatl(bJ(4J 

4 A Yes. 

5 Q Did J.P. 

~---~----~-~-~-~ 

8 c'Ycieiis~. ______ _ g b)(4) 

1 Q (b)(4) 

11 A bJ(4J so Q?)(7l((bJ(4J 

12 (b)(4) 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 Q And in your opinion, what was 

23 the bJ(4l 

24 (b)(4) ? 

25 A b)(4) 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 444 - 447 
Page 44B Page 450 

1 Nowak 2 ~(b")(4"1------------~I 

3 n Why couldn't anybody do what Mr. 

4 (bl(7l(CJ was doina? 

5 A b)(4) I 

6 (b)(4) 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18~-;cc------;=====--:--;:-c:-c""",ea==,~ 19 Q And somebody like Mr. fb1(71(CI I 

20 ~l(b~l('"l--------'---------=--acl 

21 _(b)(4) I? 

22 A fb)(4) I 

23 (b)(4) 

N 

25~------------~ 

Page 449 

1 Nowak 

2 (b)(4) 

3 

4 

5 

i(b)(4) 6 Q I 

(b)(4) 7 I! 

8 A KbJ(4) I 

9 (b)(4) 

10 I 

Q l(b)(4) 11 I 

12 (b)(4) 

13 

14 

15 j(b)(4) I? 

16 A l(b)(4) I 

17 0 You testified earlier as well 

18 about l(bJ(4l 

19 (b)(4) 

20 

21 22~(b~)(4

"1---I~'?---------~ 

23 A l(b)(4) I 

24 (b)(4) I 

25 I 

~------------~ 

Nowak 

2 (b)(4) 

3 

4 

5 

6~------------~ 7 Q To the extent ou know, would 

8 that also be true bJ(4l Mr. 

9 l(bl(71(CI l's~ 

1 O A That's true. 

11 Q 

12 A 

13 fb1(4) 

~b)(4) 

)(4) 

r I 

I 

14 Q Just one last question. 

15 Ms. Ryall asked you about the 

16 concept offbl(4l 

17 !(b)(4) 

18 A Yes. 

19 Q Is there a different word used 

20 in the industry other thanl(bJ(4l P, 

21 A Yes. Actuall\l the term 

22 b)(4) 

23 

N 

25 

Page 451 

1 Nowak 2 ~b~)(4")---==~-------~ 

3 

4 

5 

6~-------------- 7 MR. RAISLER: No further 

8 questions. 

9 MS. RY ALL: I saw that word used 

10 in some commentary. 

11 THE WITNESS: !(b)(4! is a very 

12 commonly used word, yes. 

13 MR. RAISLER: No further 

14 questions. 

15 MS. RY ALL: We're finished. 

16 Thank you for your time. 

17 THE WITNESS: You're very 

18 welcome. 

19 MS. RY ALL: We're off the 

20 record. 

21 (Time noted: 4:45 p.m.) 

22 

23 

24 

25 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 Pages 448 - 451 
Page 452 Page 454 

2 

3 ACKNOWLEDGMENT 

4 

5 UNITED STATES OF AMERICA) 

ss: 

6 COMMODITY FUTURES TRADING COMMISSION) 

7 

8 I, MICHAEL NOWAK, hereby certify 

9 that I have read the transcript of my 

1 O testimony taken under oath in my deposition 

11 of AUGUST 4, 2010; that the transcript is a 

12 true, complete and correct record of what 

13 was asked, answered and said during this 

14 deposition, and that the answers on the 

15 record as given by me are true and correct. 

16 

17 

MICHAEL NOWAK 

18 

Subscribed and sworn to 

19 before me this day 

of , 2010. 

20 

21 NOTARY PUBLIC 

22 

23 

24 

25 

1 

2 

3 INDEX 

4 WITNESS EXAMINATION BY 

5 MICHAEL NOWAK MS. RYALL 

MR. RAISLER 445 

6 

7 

8 EXHIBITS 

9 COMMISSION'S EXHIBITS 

FOR IDENTIFICATION 

10 

18 Instant message exchange 

11 19 Instant message exchange 

20 Instant message exchange 

12 21 E-mail chain 283 

22 E-mail 286 

13 23 E-mail 290 

24 Instant message exchange 

14 25 Instant message exchange 

26 Instant message exchange 

15 27 Instant message exchange 

28 Instant message exchange 

16 29 Instant message exchange 

30 Instant message exchange 

17 31 Instant message exchange 

32 Instant message exchange 

18 33 E-mail 407 

Page 453 

PAGE 

258 

PAGE 

258 

270 

280 

299 

310 

327 

342 

362 

365 

377 

393 

403 

34, 35, 36 Instant message exchanges 411 

19 37 Instant message exchange 429 

20 

21 

22 

23 

24 

25 

[8/4/2010 10:00 AM] Nowak, Michael Vol 2 

1 

2 CERTIFICATE 

3 STATE OF NEW YORK) 

ss: 

4 COUNTY OF NASSAU) 

5 

6 I, KEVIN JONES, a Shorthand Reporter 

7 and Notary Public in and for the State of 

8 New York, do hereby certify: 

9 That the testimony of MICHAEL NOWAK was 

1 O held before me at the aforesaid time and 

11 place. 

12 That said witness was duly sworn before 

13 the commencement of the testimony and that 

14 the testimony was taken stenographically by 

15 me and is a true and accurate transcription 

16 of my stenographic notes. 

17 I further certify that I am not related 

18 to any of the parties to the action by blood 

19 or marriage and that I am in no way 

20 interested in the outcome of this matter. 

21 IN WITNESS WHEREOF, I have hereunto set 

22 my hand this 13th day of August, 2010, 

23 

24 KEVIN JONES 

25 

Page 455 

1 

2 ERRATA SHEET 

3 DEPOSITION OF: MICHAEL NOWAK 

RE: SILVER PRICES 

4 DATE TAKEN: AUGUST 4,2010 

5 PAGE LINE CORRECTION REASON 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

MICHAEL NOWAK 

20 Subscribed and sworn to 

before me this~~ day 

21 of_~~~~~,2010. 

22 

23 NOTARY PUBLIC 

24 

25 

Pages 452 - 455 
Transcriot Word Index 

b)(4) (b)(6) (b)(7)(C) 

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