Deutsche Bank Settles Silver Rigging Allegations for $38M

Deutsche Bank (DB) has agreed to pay $38M to settle a securities lawsuit alleging that it colluded with other banks to manipulate silver prices. According to Reuters, this agreement could compel other banks that have been accused of the same misconduct to settle.

According to the complaint, investors are accusing the German lender, Bank of Nova Scotia (BNS), and HSBC Holdings (HSBC) of fixing silver prices. They purportedly did this during a secret meeting conducted daily known as the Silver Fix. The silver manipulation scam allegedly began in 2009 and the alleged colluders suppressed prices on about $30B of silver financial instruments and silver that were traded annually.  As a result of the alleged silver manipulation scam, banks were purportedly able to make returns that could exceed 100 percent annualized.

Investors claim that UBS AG (UBS) exploited the silver rigging. However, U.S. District Judge Valerie Caproni dismissed the Swiss lender from the case. She said that even if UBS profited from the silver manipulation there was no evidence provided to show that the Swiss bank had rigged prices.

In her decision, Judge Caproni said that investors would be allowed to pursue manipulation and antitrust claims against HSBC Holdings and Scotia Bank, including allegations of bid-rigging, use of manipulative device claims, unjust enrichment, price fixing, price manipulation, unlawful restraint, principal-agent claims, and aiding and abetting.

It was last year that US authorities began investigating certain banks, including Barclays (BARC), HSBC, Scotia Bank, Credit Suisse Group (CS), Goldman Sachs Group Inc. (GS), Deutsche Bank,  JPMorgan Chase & Co. (JPM), UBS, Standard Bank Group Ltd. (SBK), and Société Générale SA to determine whether they were involved in manipulating precious metal benchmarks.

Yahoo and The Wall Street Journal reported that last year that the Commodities and Futures Trading Commission and the US Department of Justice conducted at least 10 probes over the possible manipulation of silver, gold, palladium, and platinum benchmarks. These benchmarks affect the prices of expensive jewelry and financial products. In May 2015, the UK’s Financial Conduct Authority fined Barclays £26m for failings that allowed a trader to try to rig the gold fix.

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Deutsche Bank to Pay $38M in US Silver Price Fixing Case, Reuters, October 18, 2016