In Major Victory For Gold And Silver Traders, Manipulation Lawsuit Against Gold-Fixing Banks Ordered To Proceed

Tyler Durden's picture

Back in April, precious metal traders felt vindicated when Deutsche Bank agreed to settle a July 2014 lawsuit alleging precious metal manipulation by a consortium of banks. As a reminder, In July 2014 we reported that a group of silver bullion banks including Deutsche Bank, Bank of Nova Scotia and HSBC (later UBS was also added to the defendants) were accused of manipulating prices in the multi-billion dollar market. The lawsuit, which was originally filed in a New York district court by veteran litigator J. Scott Nicholson, a resident of Washington DC, alleged that the banks, which oversee the century-old silver fix manipulated the physical and COMEX futures market since January 2007. The lawsuit subsequently received class-action status. It was the first case to target the silver fix.

The alleged conspiracy started by 1999, suppressed prices on roughly $30 billion of silver and silver financial instruments traded each year, and enabled the banks to pocket returns that could top 100 percent annualized, the plaintiffs said.

Many expected that this case would never go anywhere and that the defendant banks would stonewall indefinitely: after all their legal budgets were far greater than the plaintiffs.

Which is why so many were surprised to learn six montsh ago that not only had this lawsuit against precious metals manipulation not been swept away, but that the lead defendant, troubled German bank Deutsche Bank agreed to settle the litigation over allegations it illegally conspired with Bank of Nova Scotia and HSBC Holdings Plc to fix silver prices at the expense of investors. Terms of the settlement were not disclosed, but the accord will include a monetary payment by the German bank.

As we reported, at the time, it was clear that "there would have been neither a settlement nor a payment if the banks had done nothing wrong." As Reuters further noted, Deutsche Bank has signed a binding settlement term sheet, and is negotiating a formal settlement agreement to be submitted for approval by U.S. District Judge Valerie Caproni, who oversees the litigation. A Deutsche Bank spokeswoman declined to comment. Lawyers for the investors did not immediately respond to requests for comment.

What was also notable is that in a curious twist, the settlement letter revealed a striking development, namely that the former members of the manipulation cartel had turned on each other. To wit:

“In addition to valuable monetary consideration, Deutsche Bank has also agreed to provide cooperation to plaintiffs, including the production of instant messages, and other electronic communications, as part of the settlement. In Plaintiff’s estimation, the cooperation to be provided by Deutsche Bank will substantially assist Plaintiffs in the prosecution of their claims against the non-settling defendants.”

That was the last time we heard of that particular lawsuit until today, when overnight US District Judge Valerie Caproni dismissed UBS Group AG as a defendant in from the lawsuit.

When dismissing UBS from the settlement, Caproni said this was appropriate because there was nothing showing it manipulated prices, even if it benefited from distortions. "At best, plaintiffs allege that UBS engaged in parallel conduct by offering (along with the fixing members) below-market quotes," Caproni said in her 61-page decision.

However, far more important, was her ruling that investors may pursue antitrust and manipulation claims against Bank of Nova Scotia ("ScotiaBank") and HSBC Holdings Plc, clearing the way for silver manipulation price-fixing litigation. 

Caproni said the investors sufficiently, "albeit barely," alleged that Deutsche Bank, HSBC and ScotiaBank violated U.S. antitrust law by conspiring opportunistically to depress the Silver Fix from January 2007 to December 2013. To wit:

Plaintiffs clear the plausibility standard, albeit barely, with respect to their pricefixing and unlawful restraint of trade claims under Section 1 based on allegations that the Fixing Members conspired opportunistically to depress the Fix Price between January 1, 2007 and December 31, 2013.

More importantly, she said the following:

The Fixing Members’ Motion to Dismiss is GRANTED with respect to Plaintiffs’ antitrust claims for price fixing and unlawful restraint of trade from the beginning of the Class Period through December 31, 2006, and from January 1, 2014 through the end of the Class Period. The Fixing Members’ Motion to Dismiss is further GRANTED with respect to Plaintiffs’ manipulative device claims from the beginning of the Class Period through August 15, 2011, and with respect to Plaintiffs’ claims for bid-rigging, and unjust enrichment.


The Fixing Members’ Motion to Dismiss is DENIED with respect to Plaintiffs’ antitrust claims for price fixing and unlawful restraint of trade from January 1, 2007 through December 13, 2013. The Fixing Members’ Motion to Dismiss is further DENIED with respect to Plaintiffs’ price manipulation claims, Plaintiffs’ manipulative device claims after August 15, 2011 and Plaintiffs’ aiding and abetting and principal-agent claims.

As a result, "the Clerk of Court is respectfully directed to close the open motions at docket numbers 73 and 75. Plaintiffs’ deadline to show good cause why leave to replead should be granted is October 17, 2016."

This means that a US Federal Court has found that a lawsuit - the first of its kind - has merit and will now proceed to rule on the following claims versus HSBC and Bank of Nova Scotia:

  • employment of a manipulative device claims
  • bid-rigging, and unjust enrichment.
  • price fixing and unlawful restraint
  • price manipulation claims
  • aiding and abetting and principal-agent claims.

And so the discovery process begins, which will expose just how much market manipulation takes place in the silver (initially as there is a parallel lawsuit taking place with regard to gold) market by major banks.  To wit:

The parties, together with the parties in In re Commodity Exch., Inc., Gold Futures & Options Trading Litig., No. 14-md-2548 (VEC), must meet and confer regarding a proposed schedule for discovery and class certification. The parties are required to submit a joint proposal (if possible) or separate proposals (if a joint proposal is not possible) by October 21, 2016. Within that submission the parties must address whether discovery in this case should be consolidated with discovery in In re Commodity Exch., Inc., Gold Futures & Options Trading Litig., No. 14-md-2548 (VEC), and should include any other items they would like to discuss at the October 28, 2016 conference.

Or perhaps not: as Reuters reports, investors plan soon to seek preliminary approval of a settlement, their lawyer Vincent Briganti said on Wednesday. Terms have not been disclosed.

In any case, the judge ruled that "the parties must appear for a pretrial conference on October 28, 2016 at 3:00 p.m. in courtroom 443 of the Thurgood Marshall Courthouse, 40 Foley Square, New York, NY 10007."

The lawsuit is one of many in the Manhattan court in which investors have accused banks of conspiring to rig rates and prices in financial and commodities markets: courtesy of this ruling, alleged "manipulator" banks will now be far more eager to reach a settlement or else risk a full blown discovery process.

The full lawsuit is below.

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HenryKissingerChurchill's picture


but silver was down due to jawboning during china´s golden week!

Silver Bug's picture

A rare case of the system actually standing up and punishing the manipulators. This is not normal. I wonder what their angle is.

Pinto Currency's picture

see pg 5 to 10 as to why they were manipulating gold


p.s. bad news - Bart Chilton is the new judge.

AllThatGlitters's picture

Is that what's spiking Silver right now?

Live Silver Chart:

Looks like people expect the suppression to end soon!

Now we know why metals got crushed the other day?

kliguy38's picture

FINALLY.......the US justice system will triumph over evil for the little guy.....BWAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA

Soul Glow's picture

Just figred out what happened to gold and silver....

China just joined the SDR.  What would the IMF ask for in return?


China just dumped 1k tonnes on the market at the request of the IMF TO JOIN THE SDR.

Jim Sampson's picture

Just want to thank those bastards... I was able to get a butt-load... well, many butts loaded, of silver at rock bottom prices.  Still hate them though.

BaBaBouy's picture

Just Love Those BAR Pics ~~~ C'mon Hedgeless ... Post Some Pics ~ ~ ~

bania's picture

I guess yesterday was the celebration party?

JRobby's picture

"But! but! but! we were under orders!"

"From whom?" "I don't know? It was all done with PO Boxes in NY, DC, London, Brussels.............."

SafelyGraze's picture

there is no reason for a bank -- or any other financial entity -- to be required to deliver metallic objects when instead its purpose is to provide monetary instruments.

otherwise someone might demand that the bank deliver furniture upon demand. 

or cleaning, heating, and AC services. 

these examples demonstrate how ridiculous the whole idea is of demanding minerals from a financial institution.

fortunately, these institutions -- as well as the government -- are not expected to deliver minerals to rogue individuals who might other harrass them by presenting "notes" describing some sort of mineral object characterized by its weight. 

SoilMyselfRotten's picture

China just dumped 1k tonnes on the market at the request of the IMF TO JOIN THE SDR


My guess would be that not one physical ounce has left their clutched hands.

beemasters's picture

Yes, there will be lawsuits. Yes, there will be settlements. Yes, the manipulation will eventually still continue.

knukles's picture

They turned DB.
If they wanted to, they turned DB and could pursue this up to the BIS and IMF, through the Fed, BoJ, etc.

But it won't.
Will it?
I didn't think so either.

philipat's picture

Strange how these actions only ever go ahead if they are directed at non-US Banks? That is, of course, because JPM and the other US TBTF's are all just doing "God's work".

The Lawyers need to get in there quick for the Discovery phase before they do a Hillary? You know, like with a cloth or something..

HungryPorkChop's picture

Last week there was a picture and brief article on ZH about a shredding company truck parked in front of the FED.  And now this week a judge allows a lawsuit to proceed for gold and silver manipulation.  I'm sure there is no connection? 

RAT005's picture

And china SGE is closed for a week......but to your point I'm sure no gold ever traded hands during the smash and silver led the smash down....


Did this story just give silver a little lift?  I was about to place an order at $17.50 and now it popped up over $0.20 :-(

Bay of Pigs's picture

I doubt they would they give up 1000 tons of physical gold when they have been accumulating it for many years now. It doesnt make any sense to me, as they dont export one ounce of physical gold or silver.

The smashdown reeks of the usual culprits in London and NY, not Shanghai (as they are closed).

Soul Glow's picture

Why would they want to be a part of the SDR basket anyway?  The Chinese are not some all knowing group of financiers - they are just like their counterparts in the west.  They may be acumulating gold, but it is undocumented.  If we are to question the US gold holdings - which I know you are actually a believer that Ft Knox has gold, whih I disagree with - then we must question the Chinese gold holdings.  

It is highly likely that China has barren vaults whereas the elite have stashed their stock piles in private holding.  I trust nothing of the Chinese as I trust nothing of the London and NYC bankers.  They are all fraudulent.  Yet they play their games.  To play the SDR game the Chinese needed to post collateral.  The IMF needed a drop in gold.  The IMF said post 1k tonnes of gold on the paper market and you're in the club.

Oh and that's the key part Bay, it's just paper gold posted by the Chinese.  It wasn't the actual bullion.

omniversling's picture

Smashdown could be to pressure those BRICS that have been stacking. Much like oil was smashed down to put pressure on the Russian economy. Have posted before, that with the entire trading space/markets fully under AI computer control now, no regualtory oversight, and no rule of law, for me it's concievable that the PUBLISHED price of any commodity or stock can be modelled and programmed to be at any price/level that the controllers decide. Part of CyberWW3™.

With this capability, impunity and a bit of 'chutzpah', theoretically the paper price could be taken to 0. There may be issues with failure delivery, loss of confidence in the exchanges etc, confiscation (or similar), which had the equivalent of black-swan-potential. There may be issues with arbitrage with/on the SGE (apparently already happening), but at this point in time, NOTHING and I mean NOTHING would surprise me. There are so many grenades with the pins out strategically placed around the world right now, that ANYTHING could happen. The more crazy and the more unlikely, the more plausible.

You really should try the cold chai...

abyssinian's picture

"no intent here to maniuplate prices, the traders just wanted to make money."  "No reasonable person would prosecute this case" 

Mr. Bones's picture

I was about to make this comment. 

I'll add that all of the triplicate backups and the original machines were lost during a tragic demolition accident during a that hurricane in NY.

Let's have a moment of silence for all of the exculpatory evidence that was lost.


Reichstag Fire Dept.'s picture proof of that? That wouldn't surprise me at all.

Boris Alatovkrap's picture

Maybe this is open way for price correction on Copper, too?

centerline's picture

Urban mining operation stockpiling for better prices?

RaceToTheBottom's picture

This is a smokescreen, it has to be.  I expect a lofty fine for using the wrong denomination stamps on all mailings regarding PM prices....

Which government does the courts work for?  The same one that requires the FED to operate.  And the FED requires PMs to be depressed...


harrybrown's picture

Jim Rickards = shill insider

Sorry for the downvote but that C(IA)OCK  Sucker needs hanging

Just my opinion

GUS100CORRINA's picture


Pumpkin's picture

A rare case of the system actually standing up and punishing the manipulators. This is not normal. I wonder what their angle is.


Hey, don't get carried away.  A few more dogs and a few more ponies is all.

Killdo's picture

Canadaian banks are terrible. I had account with Scotiabank - every now and then I woudl get some strange charges for no reason. Then they woudl decrease a minimum requirement from say 10 k to more without telling me and then a year later I woudl notice I lost 300$ or so. It happened every few years until I finally closed the account

HSBC is interesting - in England they had excellent customer service - in Canada or here in the USSA they were pretty shit. Too busy money laudering for Latin American druglords.

JLee2027's picture

So in 15 years or so, we may see victory.


/sarc off

thesonandheir's picture

These guys are doing you a favour.


Anyone trading or investing in paper gold needs to have their heads examined.

VWAndy's picture

 As if it was not a criminal matter.

Raffie's picture

So if the people who crushed the PM yesterday and today get in trouble for it, we might see something in 2020? That is if our country is still here.

Dg4884's picture

Wishful thinking on both counts.

Raffie's picture

Ya, I have a vision and would like to see it fulfilled.

IridiumRebel's picture

Meanwhile, AU AG gets hammerfucked by algos...

Yen Cross's picture

   Does that explain the sudden $5.00 surge in gold. back to yesterdays closing levels?

DogeCoin's picture

Probably. I was wondering the same. On topic: They manipulate more than just gold/silver, PMs just experience the most egregious manipulation. We live in a pricing fixing environment which the CBs call "price stability", it's no different than what the central planners did in Communist countries or what ancient Imperial China did with it's monopoly markets in strategic/important resources (e.g. Salt, Iron, Alcohol). Price fixing and manipulation has been around for A LONG FUCKING TIME, and it's not about the prices themselves, it's about influencing the PSYCHOLOGY of the market and exerting control over them. So for those trolls who deny any manipulation happens in commodity markets, read your fucking history before you open your ignorant mouths /rant over.

Conax's picture

So how do I get my money? I figure they should buy all silver offered up for $100 an ounce until everyone is satisfied they have been made whole.

What's the number down thah?

Kaiser Sousa's picture

they aint moving the committed with what theyve been  doing the last 2 weeks...


john milton's picture

Oh, thats nice but dont wait any gains on price coz gold is 25% overvalued according to deutsche banks chief strategist

VWAndy's picture

 As sports go the mental gymnastics suck balls. That this is in a civil court boogles the mind.

Joebloinvestor's picture

No jail time and if anyone is prosecuted just a fine.

Ban KKiller's picture

Big deal. The FIAT folks will just print until you can't see the sun. Who is fixing the lead price? Best investment in 1999 was .22 long rifle shells. 

We Are The Priests's picture

More bad news for DB and Merkel.

dark fiber's picture

That judge better watch out for nailguns.

Madcow's picture

Gov-Co now has no choice but to round up and imprison all fraud victims, whistleblowers and federal agents suspected of enforcing the law. 


Once Hillary is in office, you can expect "Phase 2" - where they go door to door arresting (if not simply executing) everyone who can't prove that they've recently committed securtites fraud.


Its the only way to save the "economy." 


Herdee's picture

That'll allow the information gathered from European Regulators to go after the F'n banking crook ScotiaBank/Macatta the Canadian Bank hiding behind all their corrupt politicians in Ottawa that always brag about how honest and prestine the Canadian banking system is. Don't forget, the biggest bank in Germany turned rat on all the others in order to save their executives from being locked up in prison for a very long time in the United States. You pay the big fines to the DOJ as a form of bribery because you know that western governments need the money to operate since they are all essential broke and insolvent with trillions of unfunded liabilities going forward. Endless war, prison systems, health care along with rotting infrastructure and huge pension scams. Apparently the old slogan is still true and applies perfectly to the banking syndicates that are operating like organized crime cartels, " There's no honoour amonst thieves".