Gold and silver investors have been watching the Department of Justice's investigation of criminal price rigging at JPMorgan Chase and other bullion banks carefully. Several crooked traders have pled guilty to “spoofing” the markets, and more have been indicted.
The DOJ has even suggested the banks have been engaged in racketeering. Prosecutors may use RICO laws designed for taking down organized crime syndicates to prosecute these shady Wall Street firms.
The banks’ problems go beyond the prospect of prison time for the perpetrators and criminal fines, however.
Another of the troubles with running a years-long, well-organized, and widespread scheme in which banks cooperated to stick it to their clients and other naive people speculating in the futures market is that it creates a large class of victims.
Now they eagerly await their opportunity to seek justice in civil court. And they can present citizen juries with numerous criminal convictions and mountains of evidence procured by the Justice Department. The civil liability for the banks involved could be enormous, particularly if punitive damages are involved.
There are multiple class action suits underway:
London Silver Fixing: A handful of major banks were involved in a scheme to rig the London Silver “Fix” – a key benchmark price. This class action will likely include any person who purchased or sold silver during the class period which was from 2009 - 2015 approximately.
Deutsche Bank already settled and agreed to pay $38 million. However, none of these funds are being dispersed yet. The litigation against a group of other bullion banks is ongoing.
The case against these other banks is still in the discovery stage, which means it could be some time – perhaps a few years – before a verdict (or settlement) is reached and damages are awarded.
The remaining banks could wind up getting hit harder than Deutsche Bank because Deutsche was the first to settle and agree to cooperate.
Price Spoofing – JPMorgan: Plaintiffs are suing JPMorgan Chase specifically for rigging metals prices in the futures markets, but their suit is currently "stayed." The Justice Department has asked the court to delay the civil proceedings while the bank remains under criminal investigation.
The delay may frustrate some investors, but it has a silver lining. The evidence and results of the DOJ criminal prosecution will be very helpful to plaintiffs.
At the moment, it looks like this class will be limited to people who were hurt trading precious metals in future contracts (gold, silver, platinum, and palladium), not physical metals -- but the case may be expanded in the future.
Price Spoofing – Bank of America: This private suit follows BofA’s $25 million settlement with the Justice Department.
Like the JPMorgan litigation, the class also appears as if it will be limited to futures market participants only.
While the conclusion of these cases may be years away, metals investors with a potential claim should gather and hang on to transaction records for any purchases and sales during the past decade. Those would be needed later to demonstrate you are a member of the class and file a claim in any settlement.
Down the road (probably years), we expect there will be websites and procedures set up to help people join the class and receive any settlements due.
Money Metals Exchange remains committed to following this story closely and keeping our readers posted.
About the Author:
Clint Siegner is a Director at Money Metals Exchange, a precious metals dealer recently named "Best in the USA" by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals' brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.