Deutsche Bank Pays $38 Million To Settle Silver Manipulation Lawsuit

Tyler Durden's picture

2016 is shaping up as the year when countless conspiracy theories will be confirmed to be non-conspiracy fact: from central bank rigging of capital markets, to political rigging of elections, to media rigging of public sentiment, and now, commercial bank rigging of silver.

In short, tinfoil hat-wearing nutjobs living in their parents basement have been right all along.

Two weeks ago we reported that "In A Major Victory For Gold And Silver Traders, Manipulation Lawsuit Against Gold-Fixing Banks Ordered To Proceed," however one bank was exempt: Deutsche Bank. The reason why was known since April, when we first reported that Deutsche Bank had agreed to settle the class action lawsuit filed in July 2014 accusing a consortium of banks of plotting to manipulate gold and silver. Among the charges that Deutsche Bank effectively refused to contest were the following:

  • 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.

Briganti's affidvait provides some more information on the settlement process:

The negotiations with Deutsche Bank over the material terms of the Settlement took place over several months starting in December 2015 and continuing until the Deutsche Bank Settlement Agreement was executed on September 6, 2016.

 

Following initial phone calls with Deutsche Bank’s counsel in December 2015, Lowey and Grant & Eisenhofer engaged in lengthy negotiations with Deutsche Bank’s counsel over the material terms of the settlement, including the amount of the settlement consideration, the scope of the cooperation to be provided by the Deutsche Bank Defendants, the scope of the releases, and the circumstances under which the parties would have the right to terminate the settlement.

 

During the course of the negotiations, Class Counsel presented what we perceived to be the strengths and weaknesses of the claims and defenses, as well as Deutsche Bank’s litigation exposure.

In February 2016, we reached an agreement with Deutsche Bank on the amount of the settlement, subject to the negotiation of other material terms of the deal. For example, given that this is the first settlement in the case, it was our view that the cooperation provisions of the deal were extremely important to our ability to maximize the overall recovery for the class against the Non-Settling Defendants. The negotiations as to the scope of the cooperation provisions continued for several months.

 

On April 13, 2016, counsel for Deutsche Bank and Class Counsel signed a Binding Settlement Term Sheet (“Term Sheet”). The Term Sheet set forth the terms on which the parties agreed, subject to the negotiation of a full Settlement Agreement, to settle Plaintiffs’ claims against Deutsche Bank. At the time the Term Sheet was executed, Class Counsel was well-informed about the legal risks, factual uncertainties, potential damages, and other aspects of the strengths and weaknesses of the claims and defenses asserted.

 

By letter dated April 13, 2016, the Parties reported to the Court via ECF that the Term Sheet had been executed, and advised the Court that the Term Sheet would be superseded by a formal settlement agreement. ECF No. 116.

 

The parties negotiated the Deutsche Bank Settlement Agreement over the course of the next several months. The negotiations over the terms of the Deutsche Bank Settlement Agreement included various material terms over which the parties had substantial disagreement, requiring significant give and take on both sides. To that end, drafts of the Deutsche Bank Settlement Agreement went back and forth between the parties, and numerous contested issues were raised, negotiated and resolved, including without limitation, continuing negotiations over the scope of Deutsche Bank’s cooperation (see ¶ 4(A)-(G)), the scope of the releases (see ¶ 12 (A)-(C)), and the circumstances under which the parties could terminate the Settlement (see ¶ 21).

 

Thus, the Deutsche Bank Settlement Agreement, which was executed (along with the Supplemental Agreement) on September 6, 2016, was the culmination of arm’s-length settlement negotiations that had extended over many months.

 

The Deutsche Bank Settlement was not the product of collusion. Before any financial numbers were discussed in the settlement negotiations and before any demand or counter-offer was ever made, we were well informed about the legal risks, factual uncertainties, potential damages, and other aspects of the strengths and weaknesses of the claims against Deutsche Bank.

 

The Deutsche Bank Settlement involves a structure and terms that are common in class action settlements in this District. The consideration that Deutsche Bank has agreed to pay is within the range of that which may be found to be fair, reasonable, and adequate at final approval.

There was just one thing missing: the settlement amount. This afternoon, that too was revealed when according to court filings, Deutsche Bank had agreed to pay $38 million to settle U.S. litigation over allegations it illegally conspired with other banks to fix silver prices at the expense of investors. The settlement, disclosed in papers filed in Manhattan federal court, concludes one of many recent lawsuits in which investors have accused banks of conspiring to rig the precious metal markets. However, until now there was never any formal closure. Today, that closure cost Deutsche Bank $38 million.

While the amount is tiny for the German bank, now that it is enshrined in case law, it will unleash dozens of similar class action lawsuits, each tweaked a little, and each demanding tens of millions from the gold and silver rigging banks. As Reuters adds, the settlement had been expected since April, though terms had yet to be disclosed. In court papers, lawyers for the investors say the deal will likely be an "ice breaker" that will serve as a catalyst for other banks to settle.

Vincent Briganti, a lawyer for the investors, said the deal provides "substantial monetary compensation plus cooperation from Deutsche Bank in the continued prosecution of this important case against the non-settling defendants."

As a reminder, in the litigation profiled here most recently, investors claimed Deutsche Bank, HSBC Holdings Plc and Bank of Nova Scotia (ScotiaBank) rigged silver prices through a secret daily meeting called the Silver Fix, and accused UBS AG of exploiting that 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 investors said.

Earlier this month, U.S. District Judge Valerie Caproni ruled the investors had sufficiently, "albeit barely," alleged that Deutsche Bank, HSBC and ScotiaBank violated U.S. antitrust law by conspiring to depress the Silver Fix from 2007 to 2013. At the same time, the judge dismissed UBS from the case, saying there was nothing showing it manipulated prices, even if it benefited from distortions.

The Judge added that the investors could amend their complaint, including against UBS, and a lawyer for the investors has said they planned to do so.

So who gets to benefit from the settlement?

We have reason to believe that there are at least hundreds of geographically dispersed persons and entities that fall within the Settlement Class definition. The Settlement Class includes traders of COMEX Silver Futures contracts, anyone who traded in physical silver based on the Silver Fix, and traders in various silver derivatives.

The other beneficiary, of course, is the class of investors, people and "conspiracy theorists" who claimed all along that gold and silver were subject to rigging in various forms throughout the years. Well, you were right. However, we wouldn't hold much hope for getting any substantial monetary rewards. By the time the settlement is done, there will likely be a few hundred dollars per claimant.

The good news, however, is that this will only unleash many more such lawsuits, now that the seal has been broken.

As for the remaining two banks in the class action, HSBC and Bank of Nova Scotia, the next pretrial conference in that lawsuit which was greenlighted two weeks ago is scheduled for October 28, 2016. Those who wish to be present should appear at 3:00 p.m. in courtroom 443 of the Thurgood Marshall Courthouse, 40 Foley Square, New York, NY 10007.

The Vincent Briganti Declaration is below

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TahoeBilly2012's picture

Wheres my cut? I have lost plenty $$ on silver calls over the years, still long LMAO.

Badsamm's picture

Keep standing for the national anthem

38BWD22's picture

 

 

$38 million is chump change for Douche Bank.

 

Keyser's picture

Perhaps they should add a few more zeros to the fine, only fair when you consider no one went to jail... 

SumTing Wong's picture

I had some SLV along the way. What about those of us who bought the physical stuff too? Oh yeah, we're still in the money on that from buying way back when. We're under on many buys, though. We should get some cash....to buy more phyzz...

MANvsMACHINE's picture

You got to buy your phyzz for below market so I think a "Thank You Douche Bank" is in order here.

Mr. Bones's picture

It'd be better if the fine was actually at a punitive level as opposed to a cost-of-doing-business level.  I suspect that silver would rise more on the news.

Loftie's picture
Loftie (not verified) Mr. Bones Oct 17, 2016 10:42 PM

Another QE will come to undo it all. https://goo.gl/IoiSjv

philipat's picture

Hey Loftie, previously known as mofio then santafe then Aristotle of Greece then Gargoyle then bleu then oops then most recently lance-a-lot.

You are a serial spammer and a serial pain in the ass. Might I politely suggest that you go fuck yourself? And get a life.

PS. You might have noticed that my attempt to expose you for what you are is always the same. That’s because your Spam is always the same (Using fake links to your BS site which has no connection to your comments, which are deliberately dramatic to encourage people to click on the fake link) so it seems only fair that my exposure of your crap should also always be the same. An eye for an eye.

 

glenlloyd's picture

Personally I'd like to see a consolidated list of ALL the SEC cases against banking institutions and their fines since the beginning of the 08 Depression.

Reason being, it's become quite clear that banks in particular have done nothing but rig the game and profit from it for decades, and now that they're being caught it's high time to call them what they are...criminals, crooks etc. All of them.

Sounds to me like we need to ramp up the penalties for white collar crime, some CEO's / CFO's etc need to be sent up the river for a while until they all get their heads straight about what they should be doing and how they should be treating customers.

Nemontel's picture

Deutsche Bank has no hope for survival, all they can do is postpone its inevitable death! http://www.truthjustice.net/economy/where-will-all-the-money-go-when-all...

ebworthen's picture

$38 Billion to be distributed to purchasers of physical Silver, AND throw them in jai!

zeronetwork's picture

What about GOLD manipulators? Hang them all.

Nobodys Home's picture

They fixed that when they stopped the London Gold Fix    ? ??

A Nanny Moose's picture

D-Bank doesn't pay shit. It's employees, shareholders, and customers pay this fine.

Nobodys Home's picture

Especially seeing they are looking at a $14billion extortion charge!

PlayMoney's picture

No kidding, they gotta be laughing at that. Thats a weeks take....if not just one good Sunday night 2:15 a.m. raid.

VD's picture

38mill is laughable amount! and where is my share of that? i have not insignificant silver positions.... this constitutes less than a wristslap.

Raffie's picture

$38 million only took some pocket lint out at best.

 

What a joke.

JLee2027's picture

Earn 10's of billions, settle for millions, works every time.

CatsPaw's picture

Where mine is, in the bank.

crakerman's picture

These douchebags paid peanuts..

crakerman's picture

These douchebags paid peanuts..

FX223's picture

Drop in the bucket.  Fuck them!

 

Keep stacking friends.

Supafly's picture

Looks like the lawyers win at least.

 

Latitude25's picture

Meanwhile the manipulation continues.

38BWD22's picture

 

 

I don't know if platinum is being manipulated, but the Au:Pt price ratio is back up to 1.34.

Nobodys Home's picture

I've been watching that for years....ratio wise it seems not a bad time to buy. I think it coud be cheaper though. I'm surprised the chinese auto binge hasn't priced it higher.

Shlomo Schwartzman's picture
Shlomo Schwartzman (not verified) Oct 17, 2016 9:37 PM

No problem, Goyim.  We can print up 2.2 million ETFs overnight to keep the spot at a nice cozy $17 for hmmmm ever.

Goyim.

xray vision's picture

$38 million?  What's that like one day's take?  They were doing this for 15 YEARS!

williambanzai7's picture

No, that is the going rate for one Blankfein turd.

eeaton's picture

One day? Thats just a typical Monday morning take down!

Bear's picture

So WTF ... Banks manipulate at the expense of the investor and pay fine to Goverment who lost nothing by the manipulation. If it was a $38 million fine it was a $38 billion manipulation

Youri Carma's picture
That’s fairly cheap considering the $14 bill for re-selling U.S. fraud.
williambanzai7's picture

Jail? What is jail? Its where they send colored folks and hillbillies.

GRDguy's picture

It's just a form of absolution.

Pay the fine and go right back to lyin' and stealin'.

Nobodys Home's picture

Yah back in the day....Times are changing! They are redecorating for white folks and deplorable rednecks.

OregonGrown's picture

.....and them dirty devils weed smokers!

bilbert's picture

Excepting certain hillbillies from Arkansas, that is.............

Global Douche's picture

I'm a native Arkansan who had Clinton as Governor. Many in the state held their noses those two split-terms he served (Frank White was sandwiched between) especially his last. You see, too many bought his alligator tears act, then suffered more of his tax-and-spending. Hitlery will be way, way fucking worse!

TxExPat's picture

Old Arkansas Joke:

Why did they stop celebrating Thanksgiving in Arkansas?

(rimshot) Because they sent their Turkeys to Washington...

 

Yea, I remember "Slick Willies" days as Governer...

 

Dazman's picture

WHEN ARE THEY GOING TO SEND THESE FUCKING SCUMBAGS TO JAIL ALREADY?

 

GRDguy's picture

Noticed that gold and silver turned up sharply just before this post.

Let's see if they unleash more naked shorts to tamp it down.

Triple A's picture

why did silver spike from 20 to 50 in 2010 to 2011 and now the world is in a much bigger mess, more debt, political upheaval, corruption, fed vulnerability, but were sitting at 17.50. Maybe the manipulation was to the upside. I have no clue, but i am invested in silver and gold pretty heavily. I dont think we get a spike like that again until the dumbed down masses realize the pickle that the world faces, until then we drift sideways.

GRDguy's picture

IMO, it was done to protect AAPL and other similar firms.  Over 280+ financial institutions have AAPL as their largest holdings.  Although precious metals are only a small part, the increases in its price would cut into profits, along with implying that everything else should go up in prices.  Holding cheap prices in precious metals is nothing compared to the enormous profits of churning shares of AAPL and other markets.

Global Douche's picture

They carry a bigger hammer, one which We The Taxpayers paid for in said manipulation it inflicted, and those sorry fucks still use it today, until it's broke. I bet they'll enforce us paying for that shit too, not allowing a true Debt Jubilee Forgiveness. After all, we can't allow our Banker Lords to miss any meals as Dear Leader in Pyongyang, can we?

Son of Captain Nemo's picture

$38,000,000.00????

Will that be "cash" or "check"!...  My credit is excellent!!!

Uranium Mountain's picture

Yeah, that aught to cover it.  Obviously the government is in on it with them.  Corruption in the highest places. 

xetes's picture

How do I get my cut of the settlement? I have damages after all.

Seasmoke's picture

And how much will I get back on that $32000000. Let's see 1000 oz. at $32. Today at $17.50. Let's call it $15,000 and I keep the lost the 1000oz. And let silver find its true price. See I am More than fair.