HSBC, Deutsche Bank and the Bank of Nova Scotia have been accused of rigging the price of silver.
According to J Scott Nicholson, an investor who filed a lawsuit against them in the US, the banks abused their position of controlling the daily silver benchmark by unlawfully manipulating it to reap illegitimate rewards from trading.
This would have been detrimental to other investors in the $5-trillion silver market, who base billions of dollars worth of transactions on the benchmark.
By filing the suit, which claims that the banks violated antitrust laws and the Commodity Exchange Act, Nicholson hopes to represent a class of investors who have bought silver future contracts since 1 January 2007. “The extreme level of secrecy creates an environment that is ripe for manipulation,” he said.
A spokesperson for the Bank of Nova Scotia told Bloomberg that it would “vigorously defend” itself. HSBC and Deutsche Bank had not commented by last night.
Previous investigations by the US Commodity Futures Trading Commission have failed to uncover any evidence of malpractice in the silver market.