Nova Scotia and HSBC Face Silver Fix Claims, UBS Dismissed and Deutsche Settles

UBS did not set the benchmarks, but was accused of conspiring to exploit the silver fix.

UBS AG (NYSE:UBS), the world’s largest private lender, was dismissed from a class-action lawsuit in a New York federal court, alleging that the Swiss bank played a role in fixing the price of silver. U.S. District Judge Valerie Caproni rejected efforts by Bank of Nova Scotia and HSBC Holdings Plc to escape the putative class action.

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UBS was added last year to an ongoing lawsuit against several banks in a Manhattan federal court which was filed by persons that transacted in silver and silver-related investment instruments from January 1, 1999 to an unspecified date.

Litigation alleging that Bank of Nova Scotia and HSBC Plc could be pursued, according to the decision made by a U.S. district judge, keeps silver manipulation and antitrust claims alive and potentially opening up the spigot for countless similar lawsuits.

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Judge Caproni also said: “Dismissing UBS was appropriate because there was nothing showing it manipulated prices, even if it benefited from distortions.”

“At best, plaintiffs allege that UBS engaged in parallel conduct by offering (along with the fixing members) below-market quotes,” she added.

Deutsche settles and cooperates

Back in April, Deutsche Bank settled related claims, and is now negotiating a formal settlement agreement to be submitted for approval by Caproni, who oversees the litigation. Deutsche Bank also agreed to cooperate with the plaintiffs by providing instant messages and other electronic communications.

Silver futures traders sued groups of banks in 2014 alleging that they rigged prices for the precious metals and their derivatives. Investors claimed that Deutsche Bank, HSBC and ScotiaBank abused their positions by controlling daily silver fixes in a secret daily meeting called the Silver Fix.

The plaintiffs alleged that the banks reaped huge illegitimate profits, that could top 100 percent a year, from trading on roughly $30 billion of silver and silver financial instruments, but hurt other investors in those markets who use the benchmark in billions of dollars of transactions.

UBS did not set the benchmarks, but was accused of conspiring to exploit the silver fix. The bank has previously disclosed that it launched an internal probe of its precious metals business in addition to its forex investigation.

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