Last week, Germany's Deutsche Bank (DB) finalized a $60 million settlement in a case that involved the manipulation of both gold prices and silver prices. The discovery process in that lawsuit has now revealed "smoking gun" evidence that the bank did not act alone in rigging the London fixes.
Damning Chat Logs
The legal team for plaintiffs (made up of other participants in the futures markets) in the Deutsche Bank case succeeded in getting the bank to turn over transcripts of its traders' communications ahead of the London silver fix. Not only did the records reveal that the bank indeed tried to illegally rig the daily fix price to its advantage, but there was another bombshell: Deutsche Bank employees colluded with their counterparts from a number of other big banks.
The list of major financial firms implicated in the alleged rigging of precious metal prices already includes Barclays, HSBC, Bank of Nova Scotia (Scotiabank), Sociéte Général, and UBS. The new revelations would seem to suggest that the complete list expands beyond these six banks (including Deutsche). A few rumored firms are Bank of America, France's BNP Paribas, and Standard Chartered, PLC.
Traders from this group of banks were shown to be communicating in secret text chats just ahead of the price-setting (of which several of the banks were participating members). This same type of evidence was used to convict traders who were guilty of manipulating Libor, the key London interbank interest rate.
According to Bloomberg, "The Deutsche Bank documents show two UBS traders communicated directly with two Deutsche Bank traders and discussed ways to rig the market, the plaintiffs said. Among other things, the traders shared customer order-flow information, improperly triggered customer stop-loss orders, and engaged in practices such as spoofing. Spoofing entails submitting bids or offers with the intention of canceling them before they’re executed as a way to drive prices."
Plaintiffs are now determined to file a new complaint that includes the broader group of defendants and more substantive allegations. The new filing claims that these new details help prove that the case “far surpasses the conspiracy alleged earlier.” It goes on to point out that the size of these megabank institutions allowed the defendants to significantly influence the price of silver and gold when they conspired together.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.