Back in April, when we first reported that
Deutsche Bank had agreed to settle allegations it had rigged the silver
market in exchange for $38 million, we revealed something stunning: "in
a curious twist, the settlement letter revealed that the former members of the manipulation cartel have turned on each other",
and that Deutsche Bank would provide docments implicating other
precious metals riggers. 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."
Overnight we finally got a glimpse into what this "production"
contained, and according to documents filed by the plaintiffs in the
class action lawsuit, what Deutsche Bank provided as part of its
settlement was nothing short of "smoking gun" proof that UBS Group AG, HSBC Holdings Plc, Bank of Nova Scotia and other firms rigged the silver market. The allegation, as Bloomberg first noted,
came in a filing Wednesday in a Manhattan federal court lawsuit filed
in 2014 by individuals and entities that bought or sold futures
In the document records surrendered by Deutsche Bank and presented below, traders and submitters were captured
coordinating trades in advance of a daily phone call, manipulating the
spot market for silver, conspiring to fix the spread on silver offered
to customers and using illegal strategies to rig prices.
“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
plaintiffs said in their filing.
The latest evidence is critical because as the plaintiffs add, the new scheme “far surpasses the conspiracy alleged earlier.”
As a result, the litigants are seeking permission to file a new
complaint with the additional allegations, i.e., demand even more
reparations from the defendants who have not yet settled, and perhaps
even more evidence of ongoing market rigging. Their proposed complaint
broadens the case beyond the four banks initially sued to include claims
against units of Barclays Plc, BNP Paribas Fortis SA, Standard
Chartered Plc and Bank of America Corp.
Representatives of UBS, BNP Paribas Fortis, HSBC, Standard Chartered
and Scotiabank didn’t immediately respond to e-mails outside regular
business hours seeking comment on the allegations. Barclays and Bank of
America declined to immediately comment.
The Deutsche Bank documents show, among other things, how two UBS traders communicated directly with two Deutsche Bank traders and discussed ways to rig the market.
The traders shared customer order-flow information, improperly
triggered customer stop-loss orders, and engaged in practices such as
spoofing, all meant to destabilize the price of silver ahead of the fix
and result in forced selling or buying. It is also what has led on so
many occasions to the infamous previous metals "slam", when out of
nowhere billions in notional contracts emerge, usually with the intent
to sell, to halt any upside moment in the precious metals/
"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," the plaintiffs allege.
"Conspiring with other large market makers, like Deutsche Bank and HSBC,
only increased UBS’s ability to influence the market."
Some examples of the chats quoted are shown below. In the first
example a chart between DB and HSBC traders in which one HSBC trader
says "really wanna sel sil[ver" to which the other trader says "Let's go
and smash it together."
Wasn't it always obvious?
The same thing that they are doing to gold ...