Deutsche Bank Confirms Silver Market Manipulation In Legal Settlement,
Agrees To Expose Other Banks
Back in July of 2014, we reported that in an attempt to obtain if not compensation, then at least confirmation of bank manipulation in the precious metals industry, 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.
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 we were surprised to read overnight that not only has this lawsuit against precious metals manipulation not been swept away, but that the lead defendant, troulbed 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, Reuters reported citing a court filing by law firm Lowey.
Terms were not disclosed, but the accord will include a monetary payment by the German bank.
It goes without saying, that there would have been neither a settlement nor a payment if the banks had done nothing wrong.
According to Reuters, 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.
As noted above, investors had accused Deutsche Bank, HSBC and ScotiaBank of abusing their power as three of the world's largest silver bullion banks to dictate the price of silver through a secret, once-a-day meeting known as the Silver Fix.
None of this will come as a big surprise to readers, most of whom have been aware that this took place for years.
But wait there's more.
In a curious twist, the settlement letter reveals a stunning development, namely that the former members of the manipulation cartel have 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.”
The full shocking letter can be read here:
Since this is just one of manylawsuits filed over the past two years in Manhattan federal court in which investors accused banks of conspiring to rig rates or prices in financial and commodities markets, we expect that now that DB has "turned" that much more curious information about precious metals rigging will emerge, and will confirm what the "bugs" had said all along: that the precious metals market has been rigged all along.
Finally, we'll just remind readers that the US commodity "regulator", the CFTC in 2013 closed its five year investigation concerning allegations that the biggest bullion banks manipulate silver markets and prices. It proudly reported in September 2013 that it found no evidence of wrongdoing and dropped the probe. This is what it said:
The Commodity Futures Trading Commission (CFTC or Commission) Division of Enforcement has closed the investigation that was publicly confirmed in September 2008 concerning silver markets. The Division of Enforcement is not recommending charges to the Commission in that investigation. For law enforcement and confidentiality reasons, the CFTC only rarely comments publicly on whether it has opened or closed any particular investigation. Nonetheless, given that this particular investigation was confirmed in September 2008, the CFTC deemed it appropriate to inform the public that the investigation is no longer ongoing. Based upon the law and evidence as they exist at this time, there is not a viable basis to bring an enforcement action with respect to any firm or its employees related to our investigation of silver markets.
In light of this confirmation that the CFTC's probe was "lacking" perhaps it is time for the so-called regulators who at the time was headed by ex-Goldmanite Gary Gensler (and assisted by "revolving door" expert and HFT lobby sellout Bart Chilton) to reopen its investigation?
"Is The CME Preparing For An Eventual Comex Default?
"The CME curiously reported that it received notice from the Federal Reserve that it is authorized to open an account at the Fed which would “allow it to better safeguard cash deposited by its traders” CME/Fed Account.
This is event is notable for several reasons. First and foremost is the fact that the CME was designated as a “systematically important” financial institution as part of the Dodd-Frank “hoodwink the taxpayer” Act. If anyone can explain to me why a corrupted derivatives clearinghouse and trading exchange is “systematically important,” I will receive the explanation with an open mind.
To be quite frank, no bank is systematically important, especially the big banks which are continuously wrist-slapped for committing criminal acts of fraud and screwing the public. As has been demonstrated, the “systematically important” designation is nothing more that a guarantee to the banks that Taxpayer money will be tapped to ensure bonus payments may remain uninterrupted in the event of a bank collapse.
Another puzzling aspect of the CME’s decision to open a custodial account at the Fed is in the CME’s statement that the Fed account will allow it to better “safeguard” cash deposited by its traders. Note that the account is limited to “clearing members proprietary margin” accounts. This would be the cash put up by Comex clearing members – like the Too Big To Fail Banks (JP Morgan, Goldman, Citi, HSBC etc) – against margin requirements.
Why is a Fed custodial account any better than a custodial account held by a big bank? Is this an unintended signal from the Fed that the big banks are no longer safe as custodians of cash deposits?
To me this reeks of the CME enabling a mechanism that “ring-fences” any cash equity put up by clearing members for the purposes of protecting that cash against an event of default or bankruptcy. It would give the CME control over this cash. This is what occurred when Jon Corzine incinerated MF Global and JP Morgan was able to grab any and all available collateral for its own benefit.
Again, this suggests to me that CME is concerned about the risk embedded in the proprietary futures and derivatives positions of its clearing members. I would suggest that the CME is specifically nervous about the precious metals futures positions held by JP Morgan, HSBC and Scotia.
With the absurd imbalance between Comex gold/silver contracts and the amount of underlying physical gold/silver bars held at the Comex for delivery, it’s not a question of “if” the Comex eventually defaults but a question of “when.” Anyone who disagrees with this assertion is either in a state of pathetic denial or appalling ignorance.
Don’t forget that Comex contracts have a “force majeur” provision which enables the cash settlement of these contracts. Given that the outrageously large short positions in gold and silver futures contracts are primarily held by the big banks, who also happen to be clearing members, the move by the CME to ring-fence cash collateral at the Fed which is deposited by the big banks who are short gold/silver futures expressly suggests that an event of default may be closer than any of us realizes."
