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Deutsche Bank Fined for Market Manipulation

Recently, a veteran litigator living in Washington DC J. Scott Nicholson filed a lawsuit against the banks responsible for regulating the price of silver. The suit was filed for illegally manipulating the silver price for financial benefit. This case soon became a class-action suit. This is significant because it is the first court case filed over silver market manipulation.

Normally one would expect that such a case would quickly perish as the defendant banks, namely Deutsche Bank, Bank of Nova Scotia and HSBC, have considerable legal budgets and resources to defend themselves.

But to the surprise of many the case was not dismissed. Instead, Deutsche bank has accepted the allegations that it teamed up with the Bank of Nova Scotia and HSBC to illegally manipulate the price of silver to benefit fellow investors from the multi-billion dollar market.

As a result, Deutsche Bank has agreed to pay a fine.

The settlement:

Deutsche Bank is the main financial institution in this case, and have submitted a formal settlement sheet to Judge Valerie Caproni for approval. If approved, this settlement will force Deutsche Bank to pay money to investors to compensate for any financial losses.  

When asked about this settlement, Deutsche Bank’s lawyer refused to disclose any information. Lawyers representing the investors also refused to comment.

A number of investors had accused Deutsche Bank, the Bank of Nova Scotia and HSBC of abusing their power for illegal profits. It should be noted that these banks are known as the regulatory authorities of the worlds biggest silver market. It appears that silver prices were regularly manipulated during daily secret meetings referred to as ‘the silver fix’.  However, this might not be a big surprise for many because similar news reports have been circulating the media for a long time now.

Deutsche bank will co-operate:

It might be a bigger surprise than the news itself that Deutsche Bank has agreed to co-operate with the Plaintiffs. This will include the production of messages and other electronic communications. According to Plaintiffs, this positive move by the Deutsche Bank will assist in further prosecution of the other defendants.

This lawsuit is only one of many cases filed by investors against these banks for rigging the price of the precious metals market. But now with the help provided by the German bank on rigging, we should expect that more information about this illegal act will soon be gathered and will confirm the old idea that the regulatory authorities have always rigged precious metals prices.

Another interesting factor to consider is the future silver price. How will this investigation affect its price? Is this enough to regain the investor's interest in silver as a reliable asset?

The 2013 CFTC investigation:

In 2013, the CFTC (Commodity Futures Trading Commission) finally closed the 5-year-old investigation on allegations that some bullion banks conspire and rig the prices of silver in the market. The CFTC reported that it found nothing wrong in the process, and stated the following:

“CFTC division of enforcement has finally closed the ongoing investigation that we publicly confirmed in 2008 concerning silver markets. The division of enforcement is not recommending charges to the commission in that case.”

A press release issued by the commission also stated that it rarely makes any comments on these issues. However, as they confirmed the investigation in September 2008, it was better to let the public know that the investigation had ceased, as there was not sufficient evidence against the defendants to initiate legal action.

The question that arises now is this: Now that concrete evidence of price rigging is available, and one of the defendants has accepted the allegations, will the CFTC soon reopen their investigation?