Largest German Bank Settles Two Precious Metals Price Manipulation Cases
Last week Deutsche Bank settled two cases involving the manipulation of precious metals prices. On Wednesday, Deutsche Bank settled a silver price manipulation case. On Thursday, it was announced that Deutsche Bank had settled a gold price manipulation case. In both cases Deutsche Bank agreed to pay undisclosed fines AND to cooperate fully in providing evidence against their co-conspirators who have not settled the cases.
Here are the detail of what Deutsche Bank agreed:
Silver Price Manipulation Case
Deutsche Bank was sued along with the Bank of Nova Scotia, HSBC Holdings plc and UBS AG for conspiring to fix the price of silver. The case In re: London Silver Fixing Ltd., Antitrust Litigation is ongoing and is being heard in a New York Federal Court. The law suit alleges among other things that Deutsche Banks along with its co-defendants conspired to manipulate the price of silver in conjunction with the now defunct “London Silver Fixing Company”.
The London Silver Fixing Company followed a practice whereby participating members, of which Deutsche Bank was one, would set a price for silver based on available market information and “fix” the price at noon each day. Deutsche Bank announced its intention to give up its seat at the London Silver Fixing Company in early 2014. No replacement for Deutsche Bank was found and in May of 2014, the London Silver Fixing Company which had been in operation since 1897 announced it would disband. The London Silver Fixing Company has been replaced by an electronic price fixing platform operated by Thompson Reuters and the CME Group.
As a member of the London Silver Fixing Group, Deutsche Bank has agreed to pay a fine in connection with settling the case brought against it and their co-defendants. More importantly, Deutsche Bank has agreed to “provide cooperation to plaintiffs, including the production of instant messages, and other electronic communications, as part of the settlement” that the plaintiffs and Deutsche Bank believe will help in the prosecutions of the price manipulation claims of Deutsche Bank’s co-defendants who have not settled any of the allegations against them.
The Deutsche Bank settlement was a stunning admission because, U.S. and European regulators have investigated claims of silver price manipulation and concluded their investigations with out bringing any actions against any of the banks alleged to have been involved in market manipulation.
Gold Price Manipulation Case
In a separate case involving gold price manipulation, Deutsche Bank also agreed to settle allegations against it. In the case of In re: Commodity Exchange Inc Gold Futures and Options Trading Litigation Deutsche Bank is accused of conspiring with The Bank of Nova Scotia, Barclays Bank plc, HSBC Bank plc, Société Générale SA and The London Gold Market Fixing Limited to manipulate the price of gold. The Bank of Nova Scotia and HSBC Bank are also names in the silver price fixing case referred to above.
Like the silver manipulation case the suit involves a price fixing company, in this case The London Gold Fixing Company, an organization consisting of five banks that set the price of gold twice daily following a private conference call by representatives of the participating banks, including Deutsche Bank and its co-defendants. UBS has been named as a defendant but is not a member of the London Gold Fixing Company.
In connection with the gold fixing case, Deutsche Bank has agreed that in “addition to valuable monetary consideration to be paid into a settlement fund” to also cooperation in pursuing claims against the remaining alleged co-conspirators.
None of the banks named in either the silver or gold manipulation cases were American banks.
This article by BGASC is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action.