Top international banks face US probe for alleged precious metals market fix

Reuters / Arnd Wiegmann

Reuters / Arnd Wiegmann


Banking, Corruption, Crime, Finance, Germany, Global economy, Law, Markets, Scandal, Switzerland, UK, USA

The US Department of Justice is in the early stages of an investigation into at least 10 international banks—including JPMorgan Chase, Goldman Sachs and Barclays—over alleged manipulation of the precious metals market.

HSBC included in its annual report, published Monday, that the
antitrust division of the Justice Department asked the bank to
submit documents related to an investigation into the price
setting of gold, silver, platinum and palladium.

The report added that the US Commodity Futures Trading Commission
(CFTC) subpoenaed HSBC Bank USA for information on its precious
metals trading. The bank said it was cooperating with American

According to reports, the other banks
involved in the investigation include Bank of Nova Scotia, Credit
Suisse, Goldman Sachs, JPMorgan Chase, Societe Generale, Standard
Bank and UBS.

The banks have yet to comment, although HSBC confirmed the
investigation was “at an early stage.” Barclays will
have to reveal if they are involved when it releases its annual
report next week, according to The Independent newspaper.

READ MORE: Goldman Sachs, HSBC, BASF sued in first US metals
price manipulation case

Investors and jewelers in the US have already sued a handful of
top financial firms for an alleged eight-year manipulation of
platinum and palladium prices. Those accused include units of
Goldman Sachs Group (the world’s biggest global investment bank),
HSBC Holdings (Europe’s largest bank by market value), the metals
unit of the world’s largest chemical company, BASF and Standard
Bank Group from South Africa — the world’s largest producer of
platinum and second largest producer of palladium after Russia.

Until recently, gold, silver, platinum and palladium prices were
set by a century-old process where a small number of banks would
meet for daily or twice-daily conferences. That process was
overhauled last year with the help of the London Bullion Market
Association. Now, an electronic, auction-based system serves as a
regulatory structure for market prices.

READ MORE: Banking breeds cheating for financial gain –
Swiss researchers

The DOJ’s precious metals probe has surfaced in the midst of
other global banking investigations into the rigging of other
financial benchmarks.

The Swiss regulator FINMA included its metals-rigging
investigation into a November settlement with UBS Group over
currency-rate manipulation, saying there was a “clear attempt
to manipulate fixes in the precious metal market
” by UBS.

READ MORE: Banks fined record $4.3bn for corrupting integrity of
currency trading

The UK Financial Conduct Authority (FCA) is also looking into
banks’ possible fixing of precious metal prices as it works
through its foreign exchange manipulation probe, though wider
probes by FINMA, FCA and Germany’s BaFin have stalled, according
to The Independent. The latter two each have already said that
there was no rigging of gold price-setting, according to Bloomberg.

Top banks — including JP Morgan, UBS, Citigroup, Royal Bank of
Scotland, HSBC and Bank of America — were accused last year of tampering with currency
interbank rates on the largely unregulated $5.3 trillion-a-day
foreign exchange market. Bankers allegedly worked together and
sent secret signals to manipulate the important currency
benchmarks to boost bank profits. The banks settled with the CFTC
in November for more than $4 billion.

In addition, many of the same mega-banks — including JPMorgan
Chase, Barclays, Credit Suisse and at least 10 other of world’s
biggest international lenders — were sued in 2013 by US regulator FDIC for causing
millions of dollars in losses at credit unions by allegedly
rigging the Libor benchmark rate.

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