In a lawsuit filed with the federal court in the Southern District of New York, investor J. Scott Nicholson claims that the three banks who have run the London Silver Fix have manipulated the world benchmark price for the metal to their own benefit since 2007.
The suit, which is requesting class-action status, claims the three banks have manipulated both physical silver prices, as well as futures contracts on the COMEX exchange, in violation of anti-trust laws and the Commodity Exchange Act.
The plaintiff contends that the daily phone conference meetings between HSBC, Deutsche Bank, and Bank of Nova Scotia (Scotiabank) are secret, unregulated and that no records or transcripts are kept of the meetings.
Several lawsuits claiming manipulation of the gold market have been brought against these three banks as well as Barclays and Societe Generale, as the five members of the London Gold Fix. Barclays was recently fined $44 million and a trader banned for life for manipulating the London Gold Fix the day after paying a $453 million fine for rigging LIBOR rates. This is the first actual conviction for gold manipulation in the modern era.
As more banks exit the base metals and commodities trading market, they are rolling their precious metals trading into their currency/foreign exchange divisions. With the increased scrutiny by regulators from several nations as well as the EU, the opportunity is there to uncover the manipulation of the gold and silver markets that the examination of daily trades point to. The question will be, whether the politicians and regulators will have the courage to expose the practice, since many regulators are former executives of the same banks they are supposed to be regulating.