Serpo
5th March 2014, 01:27 PM
http://s1.reutersmedia.net/resources/r/?m=02&d=20140305&t=2&i=854380644&w=580&fh=&fw=&ll=&pl=&r=CBREA240U9600 Logos are seen outside a branch of Barclays bank in London July 30, 2013.
Credit: Reuters/Toby Melville
(Reuters) - The five banks (http://www.reuters.com/sectors/industries/overview?industryCode=128&lc=int_mb_1001) involved in setting the London benchmark gold price have been accused in a lawsuit of price manipulation, a filing with a U.S. federal court in New York showed.
In the filing with the U.S. District Court in Manhattan dated March 3, New York resident Kevin Maher, who says he bought and sold gold and gold futures (http://www.reuters.com/finance/futures?lc=int_mb_1001) and options, alleged the banks (http://www.reuters.com/sectors/industries/overview?industryCode=128&lc=int_mb_1001) overseeing the benchmark - Societe Generale (SOGN.PA (http://www.reuters.com/finance/stocks/overview?symbol=SOGN.PA)), Deutsche Bank (DBKGn.DE (http://www.reuters.com/finance/stocks/overview?symbol=DBKGn.DE)), Barclays (BARC.L (http://www.reuters.com/finance/stocks/overview?symbol=BARC.L)), Bank of Nova Scotia (BNS.TO (http://www.reuters.com/finance/stocks/overview?symbol=BNS.TO)) and HSBC (HSBA.L (http://www.reuters.com/finance/stocks/overview?symbol=HSBA.L)) - colluded to manipulate it.
Maher is bringing the suit as a class action, on behalf of himself and other investors who held or traded gold and gold derivatives that were settled based on the gold fix, or who held or traded COMEX gold futures (http://www.reuters.com/finance/futures?lc=int_mb_1001) or options, from 2004 to now.
In a statement, Deutsche said it believed the suit was without merit and that the bank "will vigorously defend against it".
A spokesperson for Societe Generale said: "Societe Generale appears to have been named as a defendant in these proceedings together with other members of the London Gold Market Fixing Ltd. The claims are unsubstantiated and Societe Generale will defend these proceedings."
Barclays and HSBC declined to comment, while Bank of Nova Scotia could not immediately be reached.
The suit is seeking unspecified damages.
Gold fixing happens twice a day in a teleconference between banks. At the start of each fixing, the chairman announces an opening price to the other members, who relay that to their customers and, based on orders received from them, instruct their representatives to declare themselves buyers or sellers at that price.
The price is adjusted up and down until demand and supply are matched, at which point the price is declared "fixed". The fixings are used to help determine prices globally.
Regulators including Germany's Bafin are looking more closely at how banks set benchmarks such as the gold fix after the Libor rigging scandal exposed widespread interest-rate manipulation. Britain's Financial Conduct Authority also said it was broadly looking at gold as part of an investigation into commodity benchmarks.
In January, Deutsche Bank said it was quitting the process after withdrawing from the bulk of its commodities business.
South Africa's Standard Bank (SBKJ.J (http://www.reuters.com/finance/stocks/overview?symbol=SBKJ.J)), now selling a controlling stake in its markets unit to China's ICBC (601398.SS (http://www.reuters.com/finance/stocks/overview?symbol=601398.SS)), is emerging as a front-runner to buy Deutsche's place in the global gold price-setting process, sources familiar with the matter told Reuters last month.
http://www.reuters.com/article/2014/03/05/us-gold-fix-idUSBREA240R620140305
Barclays Plc (BARC) (http://www.bloomberg.com/quote/BARC:LN), Deutsche Bank AG (DBK) (http://www.bloomberg.com/quote/DBK:GR) and three other banks were accused in a lawsuit of manipulating the London (http://topics.bloomberg.com/london/) gold fix, a benchmark used throughout the $20 trillion market for the metal.
Kevin Maher, a New York (http://topics.bloomberg.com/new-york/) resident who says he bought and sold gold and gold futures and options, sued yesterday in Manhattan federal court claiming the five banks overseeing the century-old benchmark colluded to manipulate it.
Maher’s complaint cites press reports, including a Bloomberg News story last week on a draft paper by two researchers showing what they said were unusual pricing patterns connected to the gold fix. The paper was the first study to raise the possibility that the banks, which also include Bank of Nova Scotia (http://www.bloomberg.com/quote/BNS:CN), HSBC Holdings Plc (HSBA) (http://www.bloomberg.com/quote/HSBA:LN) and Societe Generale SA (GLE) (http://www.bloomberg.com/quote/GLE:FP), may have been actively working together to manipulate the benchmark.
Authorities around the world, already investigating the manipulation of benchmarks from interest rates (http://topics.bloomberg.com/interest-rates/) to foreign exchange, are examining the gold market for signs of wrongdoing.
Deutsche Bank, Germany’s largest lender, said in January it would withdraw from the panels setting the gold and silver fixings. German financial markets regulator Bafin interviewed the bank’s employees as part of a probe into the potential manipulation of gold and silver prices. Britain’s Financial Conduct Authority is also scrutinizing how prices are calculated.
http://www.bloomberg.com/image/i7p4WotEumvE.jpg (http://www.bloomberg.com/photo/-gold-fixing-/-i38ELZ9EiSZE.html) Photographer: Jason Alden/Bloomberg A mouse cursor is seen hovering over the words 'Gold Fixing' on the website of London... Read More (http://www.bloomberg.com/news/2014-03-04/barclays-deutsche-bank-accused-of-gold-fix-manipulation.html#)
Maher is seeking to represent a class of all investors who, from 2004 to now, held or traded gold and gold derivatives that were priced based on the gold fix or who held or traded COMEX gold futures or options. He’s seeking unspecified damages on behalf of the class. Damages may be tripled under U.S. antitrust law.
‘Without Merit’ “We believe this suit is without merit and will vigorously defend against it,” Renee Calabro (http://topics.bloomberg.com/renee-calabro/), a spokeswoman for Frankfurt-based Deutsche Bank, said in an e-mail.
Mark Lane (http://topics.bloomberg.com/mark-lane/), a spokesman for London-based Barclays, and Juanita Gutierrez, a spokeswoman for London-based HSBC, declined to comment on the lawsuit.
Jim Galvin (http://topics.bloomberg.com/jim-galvin/), a spokesman for Paris-based Societe Generale, didn’t immediately respond to phone and e-mail messages yesterday seeking comment. Joe Konecny, a spokesman for the Toronto-based Bank of Nova Scotia (http://topics.bloomberg.com/nova-scotia/), also didn’t respond to a message seeking comment.
Miners, Jewelers The London gold fix is the benchmark used by miners, jewelers and central banks to value the metal. According to the researchers, it may have been manipulated for a decade by the banks setting it.
Unusual trading patterns around 3 p.m. in London, when the so-called afternoon fix is set on a private conference call among the five banks, are a sign of possible collusive behavior and should be investigated, New York University’s Stern School of Business Professor Rosa Abrantes-Metz and Albert Metz, a managing director at Moody’s Investors Service, wrote in a draft research paper.
In February, officials at Barclays, Deutsche Bank, HSBC and Societe Generale (http://topics.bloomberg.com/societe-generale/) declined to comment on the report. Konecny didn’t respond to a request for comment on the report at the time.
The rate-setting ritual dates back to 1919. Dealers in the early years met in a wood-paneled room in Rothschild’s office in the City of London (http://topics.bloomberg.com/city-of-london/) and raised little Union Jacks to indicate interest. Now the fix is calculated twice a day on telephone conferences at 10:30 a.m. and 3 p.m. London time. The calls usually last 10 minutes, though they can run more than an hour.
Gold Bars Firms declare how many bars of gold they want to buy or sell at the current spot price, based on orders from clients and themselves. The price is increased or reduced until the buy and sell amounts are within 50 bars, or about 620 kilograms, of each other, at which point the fix is set.
Traders relay shifts in supply and demand to clients during the call and take fresh orders to buy or sell as the price changes, according to the website of London Gold Market Fixing (https://www.goldfixing.com/terms/), where the results are published. The process is unregulated and the five banks can trade gold and its derivatives throughout the call.
The case is Maher v. Bank of Nova Scotia (BNS) (http://www.bloomberg.com/quote/BNS:CN), 14-cv-01459, U.S. District Court, Southern District of New York (Manhattan).
http://www.bloomberg.com/news/2014-03-04/barclays-deutsche-bank-accused-of-gold-fix-manipulation.html
Credit: Reuters/Toby Melville
(Reuters) - The five banks (http://www.reuters.com/sectors/industries/overview?industryCode=128&lc=int_mb_1001) involved in setting the London benchmark gold price have been accused in a lawsuit of price manipulation, a filing with a U.S. federal court in New York showed.
In the filing with the U.S. District Court in Manhattan dated March 3, New York resident Kevin Maher, who says he bought and sold gold and gold futures (http://www.reuters.com/finance/futures?lc=int_mb_1001) and options, alleged the banks (http://www.reuters.com/sectors/industries/overview?industryCode=128&lc=int_mb_1001) overseeing the benchmark - Societe Generale (SOGN.PA (http://www.reuters.com/finance/stocks/overview?symbol=SOGN.PA)), Deutsche Bank (DBKGn.DE (http://www.reuters.com/finance/stocks/overview?symbol=DBKGn.DE)), Barclays (BARC.L (http://www.reuters.com/finance/stocks/overview?symbol=BARC.L)), Bank of Nova Scotia (BNS.TO (http://www.reuters.com/finance/stocks/overview?symbol=BNS.TO)) and HSBC (HSBA.L (http://www.reuters.com/finance/stocks/overview?symbol=HSBA.L)) - colluded to manipulate it.
Maher is bringing the suit as a class action, on behalf of himself and other investors who held or traded gold and gold derivatives that were settled based on the gold fix, or who held or traded COMEX gold futures (http://www.reuters.com/finance/futures?lc=int_mb_1001) or options, from 2004 to now.
In a statement, Deutsche said it believed the suit was without merit and that the bank "will vigorously defend against it".
A spokesperson for Societe Generale said: "Societe Generale appears to have been named as a defendant in these proceedings together with other members of the London Gold Market Fixing Ltd. The claims are unsubstantiated and Societe Generale will defend these proceedings."
Barclays and HSBC declined to comment, while Bank of Nova Scotia could not immediately be reached.
The suit is seeking unspecified damages.
Gold fixing happens twice a day in a teleconference between banks. At the start of each fixing, the chairman announces an opening price to the other members, who relay that to their customers and, based on orders received from them, instruct their representatives to declare themselves buyers or sellers at that price.
The price is adjusted up and down until demand and supply are matched, at which point the price is declared "fixed". The fixings are used to help determine prices globally.
Regulators including Germany's Bafin are looking more closely at how banks set benchmarks such as the gold fix after the Libor rigging scandal exposed widespread interest-rate manipulation. Britain's Financial Conduct Authority also said it was broadly looking at gold as part of an investigation into commodity benchmarks.
In January, Deutsche Bank said it was quitting the process after withdrawing from the bulk of its commodities business.
South Africa's Standard Bank (SBKJ.J (http://www.reuters.com/finance/stocks/overview?symbol=SBKJ.J)), now selling a controlling stake in its markets unit to China's ICBC (601398.SS (http://www.reuters.com/finance/stocks/overview?symbol=601398.SS)), is emerging as a front-runner to buy Deutsche's place in the global gold price-setting process, sources familiar with the matter told Reuters last month.
http://www.reuters.com/article/2014/03/05/us-gold-fix-idUSBREA240R620140305
Barclays Plc (BARC) (http://www.bloomberg.com/quote/BARC:LN), Deutsche Bank AG (DBK) (http://www.bloomberg.com/quote/DBK:GR) and three other banks were accused in a lawsuit of manipulating the London (http://topics.bloomberg.com/london/) gold fix, a benchmark used throughout the $20 trillion market for the metal.
Kevin Maher, a New York (http://topics.bloomberg.com/new-york/) resident who says he bought and sold gold and gold futures and options, sued yesterday in Manhattan federal court claiming the five banks overseeing the century-old benchmark colluded to manipulate it.
Maher’s complaint cites press reports, including a Bloomberg News story last week on a draft paper by two researchers showing what they said were unusual pricing patterns connected to the gold fix. The paper was the first study to raise the possibility that the banks, which also include Bank of Nova Scotia (http://www.bloomberg.com/quote/BNS:CN), HSBC Holdings Plc (HSBA) (http://www.bloomberg.com/quote/HSBA:LN) and Societe Generale SA (GLE) (http://www.bloomberg.com/quote/GLE:FP), may have been actively working together to manipulate the benchmark.
Authorities around the world, already investigating the manipulation of benchmarks from interest rates (http://topics.bloomberg.com/interest-rates/) to foreign exchange, are examining the gold market for signs of wrongdoing.
Deutsche Bank, Germany’s largest lender, said in January it would withdraw from the panels setting the gold and silver fixings. German financial markets regulator Bafin interviewed the bank’s employees as part of a probe into the potential manipulation of gold and silver prices. Britain’s Financial Conduct Authority is also scrutinizing how prices are calculated.
http://www.bloomberg.com/image/i7p4WotEumvE.jpg (http://www.bloomberg.com/photo/-gold-fixing-/-i38ELZ9EiSZE.html) Photographer: Jason Alden/Bloomberg A mouse cursor is seen hovering over the words 'Gold Fixing' on the website of London... Read More (http://www.bloomberg.com/news/2014-03-04/barclays-deutsche-bank-accused-of-gold-fix-manipulation.html#)
Maher is seeking to represent a class of all investors who, from 2004 to now, held or traded gold and gold derivatives that were priced based on the gold fix or who held or traded COMEX gold futures or options. He’s seeking unspecified damages on behalf of the class. Damages may be tripled under U.S. antitrust law.
‘Without Merit’ “We believe this suit is without merit and will vigorously defend against it,” Renee Calabro (http://topics.bloomberg.com/renee-calabro/), a spokeswoman for Frankfurt-based Deutsche Bank, said in an e-mail.
Mark Lane (http://topics.bloomberg.com/mark-lane/), a spokesman for London-based Barclays, and Juanita Gutierrez, a spokeswoman for London-based HSBC, declined to comment on the lawsuit.
Jim Galvin (http://topics.bloomberg.com/jim-galvin/), a spokesman for Paris-based Societe Generale, didn’t immediately respond to phone and e-mail messages yesterday seeking comment. Joe Konecny, a spokesman for the Toronto-based Bank of Nova Scotia (http://topics.bloomberg.com/nova-scotia/), also didn’t respond to a message seeking comment.
Miners, Jewelers The London gold fix is the benchmark used by miners, jewelers and central banks to value the metal. According to the researchers, it may have been manipulated for a decade by the banks setting it.
Unusual trading patterns around 3 p.m. in London, when the so-called afternoon fix is set on a private conference call among the five banks, are a sign of possible collusive behavior and should be investigated, New York University’s Stern School of Business Professor Rosa Abrantes-Metz and Albert Metz, a managing director at Moody’s Investors Service, wrote in a draft research paper.
In February, officials at Barclays, Deutsche Bank, HSBC and Societe Generale (http://topics.bloomberg.com/societe-generale/) declined to comment on the report. Konecny didn’t respond to a request for comment on the report at the time.
The rate-setting ritual dates back to 1919. Dealers in the early years met in a wood-paneled room in Rothschild’s office in the City of London (http://topics.bloomberg.com/city-of-london/) and raised little Union Jacks to indicate interest. Now the fix is calculated twice a day on telephone conferences at 10:30 a.m. and 3 p.m. London time. The calls usually last 10 minutes, though they can run more than an hour.
Gold Bars Firms declare how many bars of gold they want to buy or sell at the current spot price, based on orders from clients and themselves. The price is increased or reduced until the buy and sell amounts are within 50 bars, or about 620 kilograms, of each other, at which point the fix is set.
Traders relay shifts in supply and demand to clients during the call and take fresh orders to buy or sell as the price changes, according to the website of London Gold Market Fixing (https://www.goldfixing.com/terms/), where the results are published. The process is unregulated and the five banks can trade gold and its derivatives throughout the call.
The case is Maher v. Bank of Nova Scotia (BNS) (http://www.bloomberg.com/quote/BNS:CN), 14-cv-01459, U.S. District Court, Southern District of New York (Manhattan).
http://www.bloomberg.com/news/2014-03-04/barclays-deutsche-bank-accused-of-gold-fix-manipulation.html