RICO Suit Filed Against HSBC And JPMorgan For Silver Market Manipulation

Tyler Durden's picture

If JPM and HSBC hoped that the lawsuits filed a week ago by Brian Beatty and Peter Laskari, which we discussed previously, were going to be the end of their public exposure with regard to possible silver market manipulation, they are about to be disappointed. Today, in a separate lawsuit filed by Carl Loeb in the Southern District of New York, a new light on precious manipulation by the duo was shone, this time involving allegations of breach of the Racketeering Influenced and Corrupt Organizations (RICO) Act. And with the CFTC itself admitting of ongoing manipulation in the silver market, it appears this issue is not going to go away quietly any time soon. Per Steve Berman, co-counsel of plaintiff law firm Hagens Berman Sobol Shapiro: "The practice of naked short selling has long been a serious issue on Wall Street. What we know about the scope and intent of JP Morgan and HSBC's actions
in this short-selling scheme dwarfs any other similar attempt to
manipulate a commodities market.
" As this case is also seeking class action status for the class, readers who wish to join this particular case may apply to do so at the following link. Plaintiffs are seeking that the court enjoin JP Morgan and HSBC from continuing their alleged
conspiracy and manipulation of the silver futures and options contracts
market.

More from PRNewswire:

According to the complaint, JP Morgan amassed a sizeable short position in silver futures and options in part through its March 2008 acquisition of investment bank Bear Stearns. By August 2008, JP Morgan and London-based HSBC controlled more than 85 percent of the commercial net short position in silver futures contracts.

The suit alleges that, starting in early 2008, the two banks began manipulating the silver futures market by accumulating unusually large "short" positions and then secretly coordinating enormous sales of silver futures contracts on the Commodity Exchange, which is known as "COMEX" and is part of the New York Mercantile Exchange.

According to the lawsuit, JP Morgan and HSBC used a variety of methods to coordinate their manipulation of the market for silver futures contracts, signaling when to flood the COMEX market with short positions, which caused the price of silver futures and options contracts to crash.

The suit describes two "crash" events that were set in motion by JP Morgan and HSBC, one in March 2008, and the other in February 2010, after defendants had amassed large short positions.  In the wake of both events, the suit alleges, COMEX silver futures prices collapsed.

"We believe that JP Morgan and HSBC's scheme was carefully conceived and coordinated to maximize their profits at the expense of innocent investors who believed that they were trading in a market free from manipulation," Berman said.

What is more interesting, is that the man who has achieved something a cult standing in the PM community, whistleblower Andrew Maguire, is also involved.

The complaint also contains allegations that in September 2008, the U.S. Commodity Futures Trading Commission launched an investigation that would eventually consider allegations made by a London-based independent metals trader named Andrew Maguire that the silver futures market was being manipulated.

The complaint alleges that Maguire disclosed to the CFTC on Feb. 3, 2010 that he received a signal from the two banks of their intent to drive down the prices of silver futures two days later, on Feb. 5, 2010. Maguire's information was correct and the price of silver dropped dramatically between Feb. 3, 2010 and Feb. 5, 2010.

In addition, the lawsuit states that both JP Morgan and HSBC still maintain highly concentrated holdings in short positions in silver futures and options, giving both banks the ability to continue manipulating the price of silver.

Plaintiffs' attorneys have asked the court to certify the case as a class action and enjoin JP Morgan and HSBC from continuing their alleged conspiracy and manipulation of the silver futures and options contracts market.

Attorneys also ask the court to award damages and attorneys' fees to the class.

Here is Hagens Berman internal statement on the case:

JP Morgan Chase & Co. (NYSE: JPM) and HSBC Securities Inc. (NYSE: HBC) face charges of manipulating the market for silver futures and options in violation of federal commodities and racketeering laws, according to a lawsuit filed in the U.S. District Court for the Southern District of New York.

The suit – which alleges violation of the Commodity Exchange Act and the Racketeering Influenced and Corrupt Organizations (RICO) Act – alleges that the two banks colluded to manipulate the market for silver futures starting in the first half of 2008 by amassing huge short positions in silver futures contracts they had no intent to fill, but did so to force silver prices down to their benefit.

According to the lawsuit, JP Morgan and HSBC used a variety of methods to coordinate their manipulation of the market for silver futures contracts, signaling when to flood the COMEX market with short positions, which caused the price of silver futures and options contracts to crash.

In addition, the lawsuit states that both JP Morgan and HSBC still maintain highly concentrated holdings in short positions in silver futures and options, giving both banks the ability to continue manipulating the price of silver.

Plaintiffs’ attorneys have asked the court to certify the case as a class action and enjoin JP Morgan and HSBC from continuing their alleged conspiracy and manipulation of the silver futures and options contracts market. Attorneys also ask the court to award damages and attorneys’ fees to the class.

If you have information you believe is important to the case, please contact Hagens Berman at 206-623-7292 or by e-mail at JPMorgan@hbsslaw.com.

We hope that the two firms' alleged highly illegal ongoing manipulation and intervention activities in the Precious Metal market will finally be curbed as a result of what is now sure to be a very public outcry exposing their practices.