Deutsche Bank & HSBC Accused of Silver Fix Manipulation

Jamie DimonPerhaps this is why Deutsche Bank could not find a single buyer for its seat on the London Fix: the bank, along with HSBC have been officially accused on manipulating the silver fix in a new suit filed in federal court in Manhattan over the weekend. 


As Bloomberg reports: 

Deutsche Bank AG (DBK)HSBC Holdings Plc (HSBA) and Bank of Nova Scotia were accused in a lawsuit of rigging the price of billions of dollars in silver, an allegation similar to earlier suits involving the London gold fix.

The banks unlawfully manipulated the price of the metal and its derivatives, an investor claims in a complaint filed yesterday in federal court in Manhattan. The banks abused their position of controlling the daily silver fix to reap illegitimate profit from trading, hurting other investors in the silver market who use the benchmark in billions of dollars of transactions, according to the suit.

The class action suit filed by J. Scott Nicholson, represents investors who bought silver futures contracts since Jan 1st, 2007:

“We intend to vigorously defend ourselves against this suit,” Diane Flanagan, a spokeswoman for the Bank of Nova Scotia, said in an e-mail. Juanita Gutierrez, a spokeswoman for HSBC, and Amanda Williams, a representative for Deutsche Bank, declined to comment.

J. Scott Nicholson, a Washington state resident who filed the case, is seeking to represent a class of investors who have bought silver future contracts since Jan. 1, 2007.

The suit includes claims of aiding and abetting manipulation, as well as violation of antitrust laws and the Commodity Exchange Act. Nicholson seeks unspecified damages.

The 117-year-old system of fixing prices for the $5 trillion silver market is set to change next month.

Will the financial MSM finally be forced to cover the silver manipulation story after years of denials?

Deutsche Bank, Germany’s biggest lender, said in January that it would withdraw from participating in setting gold and silver benchmarks in London, a month after announcing that it would cut about 200 jobs in commodities and exit dedicated energy, agriculture, dry-bulk and base-metals trading. JPMorgan Chase & Co., Morgan Stanley and Bank of America Corp. also are retreating from raw materials.

Precious metals are getting more attention from regulators after price rigging in everything from interbank lending rates to currencies led to fines and overhauled financial benchmarks.

The U.K.’s Financial Conduct Authority in May fined Barclays Plc after a trader sought to influence the gold fix in 2012. An LBMA survey showed the market wants a new silver system to be an electronic, auction-based process with more direct participants and prices that can be used in trades.

The case is Nicholson v. Bank of Nova Scotia, 14-cv-5682, U.S. District Court, Southern District of New York (Manhattan).