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New Gold Price Manipulation Probe Launched by U.S Authorities

by Avi Mizrahi
  • The global FX rates manipulation investigations that forced major banks to settle with regulators for fines of $4.3 billion, have led to a new round of investigation in the U.S. into the setting of precious metals fixing.
New Gold Price Manipulation Probe Launched by U.S Authorities
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The U.S. Justice Department and the Commodity Futures Trading Commission (CFTC ) are reportedly looking into the business practices of top international banks to see if they manipulated the prices of precious metals, such as gold, silver and platinum.

On Monday, HSBC Holdings Plc disclosed in its annual report that the Justice Department and CFTC sought documents from the bank on its precious metals dealings. The probes are at an early stage, according to the bank, which said it is cooperating with the American regulators.

According to the Wall Street Journal, at least ten banks, including Barclays Plc, JPMorgan Chase & Co., Deutsche Bank AG, Bank of Nova Scotia, Credit Suisse Group AG, Goldman Sachs Group Inc., Société Générale SA, Standard Bank Group Ltd. and UBS AG are being investigated by the Justice Department’s Antitrust Division.

Major banks were already hit by the FX rates manipulation scandal after global investigations revealed that their traders conspired to dupe clients, forcing the banks to settle with regulators for fines of $4.3 billion. The FX settlements have apparently triggered this new round of precious metals investigations as banks were required under the terms of those agreements to "identify other trading activities that could raise similar market conduct issues."

For decades the prices for gold, silver, platinum and palladium were set at daily telephone conference calls between a very small group of bankers. Only last year, the process by which the “fixes” were determined started to change toward a modern, electronic, auction system as calls for transparency in the way benchmarks were set grew.

The silver fixing was overhauled after Deutsche Bank stopped taking part in the procedure. Platinum and palladium fixes followed suit and the gold fixings will finally catch up next month.

US Justice seal

The U.S. Justice Department and the Commodity Futures Trading Commission (CFTC ) are reportedly looking into the business practices of top international banks to see if they manipulated the prices of precious metals, such as gold, silver and platinum.

On Monday, HSBC Holdings Plc disclosed in its annual report that the Justice Department and CFTC sought documents from the bank on its precious metals dealings. The probes are at an early stage, according to the bank, which said it is cooperating with the American regulators.

According to the Wall Street Journal, at least ten banks, including Barclays Plc, JPMorgan Chase & Co., Deutsche Bank AG, Bank of Nova Scotia, Credit Suisse Group AG, Goldman Sachs Group Inc., Société Générale SA, Standard Bank Group Ltd. and UBS AG are being investigated by the Justice Department’s Antitrust Division.

Major banks were already hit by the FX rates manipulation scandal after global investigations revealed that their traders conspired to dupe clients, forcing the banks to settle with regulators for fines of $4.3 billion. The FX settlements have apparently triggered this new round of precious metals investigations as banks were required under the terms of those agreements to "identify other trading activities that could raise similar market conduct issues."

For decades the prices for gold, silver, platinum and palladium were set at daily telephone conference calls between a very small group of bankers. Only last year, the process by which the “fixes” were determined started to change toward a modern, electronic, auction system as calls for transparency in the way benchmarks were set grew.

The silver fixing was overhauled after Deutsche Bank stopped taking part in the procedure. Platinum and palladium fixes followed suit and the gold fixings will finally catch up next month.

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