Possible Manipulation of gold and silver prices 1999-2014, Proposed Class Action
Based on documents in the public domain to which we refer below, we consider that there are good grounds to believe that members of six well-known financial services groups combined together to manipulate the outcome of the London Gold Fixing between about 2004 and 2014 and that members of four of those groups combined to manipulate the outcome of the London Silver Fixing between about 1999 and 2014.
The effect of this was to create false market prices, in particular by artificially depressing prices after the 3pm (London time) Gold Price Fixing and to increase bid-offer spreads in physical gold, physical silver and their respective derivative instruments. The relevant institutions did this to increase their profits from their own activities in these markets at the expense of other market participants who have therefore suffered loss and damage, probably running into hundreds of millions of pounds in aggregate.
If it can be established that these financial institutions participated in price fixing then we consider that there can be little doubt that they have breached section 2 of the Competition Act 1998 and are liable to pay damages to any other market participant that suffered loss and damage as a result.
Market participants who have suffered loss and damage are entitled to claim damages in proceedings in the Competition Appeal Tribunal (“CAT”) in a class action pursued either on an ‘opt-out’ or an ‘opt-in’ basis.
Gold and silver price manipulation – the facts as we currently understand them
It has long time been rumoured in the market that prices have been consistently manipulated by the major financial institutions via the London Gold Fixing and the London Silver Fixing. Until recently, this view was based on anecdotal evidence and the frequency of significant market price changes which could not be objectively explained in any other way.
In recent months however, two major new pieces of evidence have emerged which very strongly suggest that the market prices of both gold and silver have been consistently manipulated by the relevant financial institutions via their participation in the London Gold Fixing and the London Silver Fixing. We summarise that evidence below.
Deutsche Bank settled class actions in New York
On 13 and 14 April 2016 it was publicly announced that Deutsche Bank had agreed to settle two claims against it in the New York court that it had conspired with other financial institutions to fix gold and silver prices at the expense of investors. The agreed terms in relation to the Gold and Silver market have now been made public and settlements of $60 million and $38 million, respectively, have been agreed with between Deutsche Bank and the Claimant investors. Deutsche Bank have also agreed to provide documents and information to assist the investors to pursue claims against the other conspirators.
Class actions in Ontario, Canada
On 18 December 2015, a class action was commenced in the Superior Court of Ontario, Canada on behalf of all person or entities in Canada who between 1 January 2004 and 16 March 2014 transacted in the gold market (i.e. for physical gold or derivatives) claiming compensatory damages limited to $1 billion arising from the manipulation of the London Gold Fixing during that. A detailed Statement of Claim was filed on 15 January 2016.
On 15 April 2015 a further class action was commenced in the Superior Court of Ontario, Canada on behalf of all person or entities in Canada who between 1 January 1999 and 14 August 2014 transacted in the silver market (i.e. for physical silver or derivatives) claiming compensatory damages limited to $1 billion arising from the manipulation of the London Silver Fixing during that period.
It is the above developments, which lead us to conclude that there are good grounds to believe that the relevant financial institutions combined together to manipulate gold and silver prices via the London Fixings.
Sections 47A and 47B of the Competition Act 1998 and the CAT Rules enable claimants to make claims for damages for infringements of section 2 before the CAT by way of a class action (called “collective proceedings”) on either an opt-in or opt-out basis, subject to the permission and control of the CAT. Opt-in proceedings are brought by a representative claimant on behalf of a class of claimants who have expressly opted into the litigation. Opt-out proceedings are brought by a representative claimant on behalf of a class of claimants falling within a particular class unless they opt-out of the litigation. Claimants domiciled outside the UK are excluded from opt-out proceedings unless they expressly opt in.
Join our “manipulation of gold and silver” UK class action