Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Foreign commercial banks alleged to have colluded to manipulate gold prices, (Mar 31, 2014)
Law Firms Mentioned:The Brualdi Law Firm, P.C.
Organizations Mentioned:Bank of Nova Scotia | Barclays Bank PLC | Barclays Capital Inc. | CME Group | Deutsche Bank AG | Deutsche Bank Securities, Inc. | Deutsche Bank, AG | HSBC Americas, Inc. | HSBC USA, Inc. | SG Americas Securities, LLC | Scotia Capital USA, Inc. | Societe Generale | Societe Generale S.A. | The Brualdi Law Firm, PC | The London Gold Market Fixing, Ltd.
By Linda O’Brien, J.D., LL.M.
An investor has filed a complaint in the federal district court of New York City on behalf of a putative class of individuals and entities that directly traded physical gold, gold derivatives, and financial instruments with certain foreign commercial banks on an exchange in the United States, alleging that the banks colluded to manipulate the London Gold Market Fixing Ltd.’s price-setting process for gold (DePaoli v. The London Gold Market Fixing Ltd., March 26, 2014).
Barclays Bank PLC, Deutsche Bank, AG, HSBC USA, Inc., Societe Generale S.A., and Bank of Nova Scotia are foreign commercial financial services companies that are members of the London Gold Market Fixing Ltd. (“London Gold Fix”). The five financial institutions participate each trading day in a twice-daily price-setting process for gold and gold derivatives through a series of short conference calls. The fix is a global benchmark for gold prices used by jewelers and bankers to determine the value of securities tied to gold. Christopher DePaoli is an investor who has engaged in transactions for the purchase and sale of physical gold and financial instruments directly linked to the price of gold.
The complaint states that, in 2013, statistical analysis indicated unusually large spikes of gold derivative trading occurred after the daily fix process began that was attributed to directional information leaking during the fix itself. United States and European regulatory agencies have commenced investigations into gold price collusion and manipulation.
The reports of the London Gold Fix are then used to determine the prices of gold worldwide. Procedurally, the fix is a conference call when the member banks exchange information and decide on the price. In 2004, unusual patterns in gold prices were observed and coincided with a change in the composition of the London Gold Fix membership, according to the complaint.
The fix sets the price of gold derivatives and other financial instruments in addition to physical gold. The prices, including gold futures and options on the Commodity Exchange (COMEX) are directly and proximately caused by the prices of physical gold fixed by the defendant financial institutions.
The financial institutions, through their membership of the London Gold Fix, conspired with one another and with others in order to manipulate prices of gold and gold derivative contracts. As a result of the financial institutions unlawful conduct, DePaoli purchased and sold physical gold and financial instruments at artificial prices and suffered damages, the complaint alleges.
Depaoli asserts claims for unjust enrichment, and violations of Section 1 of the Sherman Act, Sections 4 and 16 of the Clayton Act, and state antitrust and unfair competition laws. The action seeks declaratory and injunctive relief, disgorgement, treble damages, costs of suit, attorneys’ fees, and any other just and proper relief.
The case is No. 14 CV 2124.
Attorneys: Richard B. Brualdi (The Brualdi Law Firm, P.C.) for Christopher DePaoli
Companies: The London Gold Market Fixing, Ltd.; Bank of Nova Scotia; Scotia Capital USA, Inc.; Barclays Bank PLC; Barclays Capital Inc.; Deutsche Bank, AG; Deutsche Bank Securities, Inc.; HSBC USA, Inc.; Societe Generale S.A.; SG Americas Securities, LLC
News: Antitrust NewYorkNews