The Silver Fix: New Evidence Exposes Other Banks

Evidence provided by Deutsche Bank AG (NYSE:DB), shows ‘smoking gun’ proof that UBS Group AG (NYSE:UBS), HSBC Holding Plc (NYSE:HSBC), Bank of Nova Scotia (NYSE:BNS) and other firms rigged the silver market from 2007 to 2013.
The allegation came in a Manhattan federal court lawsuit filed in 2014 by individuals and entities that bought or sold futures contracts.
The documents were disclosed after the German bank reached a $38-million settlement agreement regarding this case in October 2016.
Bloomberg reported that plaintiffs have stated in their filing, “Plaintiffs are now able to plead with direct, ‘smoking gun’ evidence,’ including secret electronic chats involving silver traders and submitters across a number of financial institutions, a multi-year, well-coordinated and wide-ranging conspiracy to rig the prices.”

The new scheme “far surpasses the conspiracy alleged earlier” and they are now requesting permission to file a new complaint with the additional allegations against Barclays Plc (NYSE:BCS), BNP Paribas Fortis SA (EPA:BNP), Standard Chartered Plc (NSE:DRSTAN) and Bank of America Corp (NYSE:BAC).
Analyst David Morgan said:“This could open up a bigger investigation that what we have seen in the past. Whether or not there is something different this time remains to be determined, but again maybe, just maybe, this time more will be revealed about the silver market.”
“This could have a lot of repercussion on how the market moves forward in 2017.”

Silver-Fixing Allegations in Chats

The plaintiffs claim that the latest evidence is critical as it provides more than 350,000 pages of documents and 75 audio tapes, along with electronic chats that show the new defendants’ involvement in collusive price manipulation.
Plaintiffs said that the Deutsche Bank documents show two UBS traders communicated directly with two Deutsche Bank traders and discussed ways to manipulate the market.
Among other things, the traders shared customer order-flow information, improperly triggered customer stop-loss orders, and engaged in practices such as spoofing, submitting bids or offers with the intention of canceling them before they are executed as a way to drive prices.

Many of the chats involve a UBS trader known as “The Hammer,” who on April 1, 2011, wrote a message urging coordination in trading: “We gotta do it the same next time…if we are correct and do it together, we screw other people harder.”
Records show that a few months later, on June 8, “The Hammer” suggested to a Deutsche Bank trader that they recruit new members to join the alleged conspiracy. “We need to grow our mafia a lil get a third position involved,” the UBS trader wrote. The Deutsche Bank trader responded, “Ok calling barx”–a reference to Barclays, according to the documents.
Until 2014, when Deutsche Bank withdrew, the global reference price for silver and other precious metals was set each day in a phone call or at a meeting with traders at a handful of banks, a century-old ritual known as the London Fix.
In October, US District Judge Valerie Caproni dismissed UBS from the case, saying there was nothing showing it manipulated prices, even if it benefited from distortions. But she allowed the investors to file a revised lawsuit against UBS.
Plaintiffs allege, “UBS was the third-largest market maker in the silver spot market and could directly influence the prices of silver financial instruments based on the sheer volume of silver it traded.”
Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.