Steve Rand
General Manager / Sr. Precious Metals Advisor
Steve Rand is the General Manager and a Sr. Precious Metals Advisor at Scottsdale Bullion & Coin. He brings over 20 years of experience in the physical precious metals markets.
News of big banks’ rigging of silver prices shook the market last spring. Now it appears the criminal acts were more extensive than initially reported. Documents turned over by Deutsche Bank AG as part of its settlement of an earlier lawsuit provide key evidence against a number of additional participants in the scheme, including key influencers of the silver spot market. 1
Deutsche Bank AG Provides the Smoking Gun
Recent Manhattan federal court filings added more weight to the original allegations made in a 2014 lawsuit. 2 The parties named in this legal filing include Bank of Nova Scotia, HSBC Holdings PLc, BNP Paribas Fortis SA, UBS Group AG, and other firms. The evidence supports earlier allegations of collusion in the silver market that set spot silver prices and affected futures contracts.
The most recent documents and evidence include numerous electronic communications, including emails, texts, and records of “secret calls.” According to the new allegations, this evidence provides specific and direct insights into a situation that “far surpasses the conspiracy alleged earlier.”
The actions of those involved are striking in how brazen and aggressive they were. The documents show that traders called before markets opened to discuss prices, and they shared order-flow information about their customers with associates on the other side of trades. Other specific steps included entering orders to influence the market and then cancelling them, a technique known as spoofing, and acting to improperly trigger customer stop-loss orders.
Long-Held Suspicions of Silver Fixing Confirmed
The news supports the allegations many have made about market manipulation in silver prices for years. The details in the submitted documents show coordinated efforts “across a number of financial institutions, a multi-year, well-coordinated and wide-ranging conspiracy to rig the prices.”
For a number of the institutions, the new evidence was particularly bad news. For example, just this year UBS was dismissed from the lawsuit for lack of evidence. The banking giant is now again subject to the allegations and significant potential fines and losses.
Based on this newly uncovered insight into the extent of the conspiracy, the plaintiffs in the case are significantly expanding their claims beyond the four banks originally named. The lawsuit has now also ensnared BNP Paribas Fortis SA, Standard Chartered Plc, Bank of America Corp, and Barclays PLc.
Additionally, observers see this new filing as significantly expanding the investigation into the allegations, including adding U.S. banks and traders to renewed scrutiny. 3
A Return to Free Market Forces
As the plaintiffs in the new court filings pointed out, UBS and other major players in the silver spot market had significant influence on silver prices. Hopefully these lawsuits will not only put an end to current price manipulation by these big banks but also deter other institutions from the practice in the future. With only free market forces at play, silver prices could then rise to natural, healthy levels.
Additional Sources
2 – https://www.bloomberg.com/news/articles/2016-12-08/deutsche-bank-records-alleged-to-show-banks-rigged-silver-prices
3 – http://www.reuters.com/article/us-silver-lawsuit-idUSKBN13X1QZ