Banks Face U.S. Manipulation Probe Over Metals Pricing – by David McLaughlin and Tom Schoenberg (Bloomberg News – February 24, 2015)

(Bloomberg) — The U.S. Justice Department is investigating whether the world’s biggest banks manipulated prices of precious metals such as silver and gold as it pushes to wrap up probes into currency-rate rigging, according to people with knowledge of the matter.

At least 10 banks, including Barclays Plc, JPMorgan Chase & Co. and Deutsche Bank AG, are being probed by the Justice Department’s antitrust division, said one of the people, who asked not to be identified because the matter is confidential.

Precious metals have come under scrutiny as authorities around the world investigate allegations that other financial benchmarks have been rigged. While the Justice Department’s probe is in its early stages, the Swiss finance regulator included the issue in a November settlement with UBS Group AG over currency-rate manipulation. Switzerland’s antitrust regulator said Tuesday that it opened a preliminary probe into the possibility of price fixing in the precious-metals market.

The U.K. Financial Conduct Authority is continuing to scrutinize firms’ behavior in relation to precious metals as part of continuing supervisory work spurred by the foreign-exchange probe. While the FCA doesn’t have authority over physical markets, it does regulate derivatives. In that context, it’s already issued one fine, ordering Barclays to pay 290 million pounds ($447.5 million) in May for a former trader who artificially suppressed the price of gold in 2012 using fake positions to avoid triggering a payout to a client.

HSBC Disclosures

HSBC Holdings Plc disclosed Monday that the Justice Department and U.S. commodities regulators have sought documents from the bank on precious-metals dealings. The London-based bank, which is under a five-year deferred prosecution agreement with the Justice Department from a previous money-laundering settlement, said it is cooperating in the probes.

Spokesmen for the Justice Department and the Commodity Futures Trading Commission declined to comment. Chris Hamilton, an FCA spokesman, declined to comment on its reviews.

The CFTC looked into the silver market once before after receiving complaints and closed the probe in 2013, saying there was no basis for action.

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