Proof that piles up by the month: Deutsche Bank Pays $60 Million To Settle Gold-Manipulation Lawsuit

2016 is shaping up as the year when countless conspiracy theories will be confirmed to be non-conspiracy fact: from central bank rigging of capital markets, to political rigging of elections, to media rigging of public sentiment, and now, commercial bank rigging of both silver and gold.

In early October, we reported that "In A Major Victory For Gold And Silver Traders, Manipulation Lawsuit Against Gold-Fixing Banks Ordered To Proceed," however one bank was exempt: Deutsche Bank. The reason why was known since April, when we first reported that Deutsche Bank had agreed to settle the class action lawsuit filed in July 2014 accusing a consortium of banks of plotting to manipulate gold and silver. Among the charges that Deutsche Bank effectively refused to contest were the following:

• employment of a manipulative device claims
• bid-rigging, and unjust enrichment.
• price fixing and unlawful restraint
• price manipulation claims
• aiding and abetting and principal-agent claims.

An affidavit filed in October shed more light on the settlement process:

The negotiations with Deutsche Bank over the material terms of the Settlement took place over several months starting in December 2015 and continuing until the Deutsche Bank Settlement Agreement was executed on September 6, 2016.

Following initial phone calls with Deutsche Bank’s counsel in December 2015, Lowey and Grant & Eisenhofer engaged in lengthy negotiations with Deutsche Bank’s counsel over the material terms of the settlement, including the amount of the settlement consideration, the scope of the cooperation to be provided by the Deutsche Bank Defendants, the scope of the releases, and the circumstances under which the parties would have the right to terminate the settlement.

During the course of the negotiations, Class Counsel presented what we perceived to be the strengths and weaknesses of the claims and defenses, as well as Deutsche Bank’s litigation exposure.
In February 2016, we reached an agreement with Deutsche Bank on the amount of the settlement, subject to the negotiation of other material terms of the deal. For example, given that this is the first settlement in the case, it was our view that the cooperation provisions of the deal were extremely important to our ability to maximize the overall recovery for the class against the Non-Settling Defendants. The negotiations as to the scope of the cooperation provisions continued for several months.

On April 13, 2016, counsel for Deutsche Bank and Class Counsel signed a Binding Settlement Term Sheet (“Term Sheet”). The Term Sheet set forth the terms on which the parties agreed, subject to the negotiation of a full Settlement Agreement, to settle Plaintiffs’ claims against Deutsche Bank. At the time the Term Sheet was executed, Class Counsel was well-informed about the legal risks, factual uncertainties, potential damages, and other aspects of the strengths and weaknesses of the claims and defenses asserted.

By letter dated April 13, 2016, the Parties reported to the Court via ECF that the Term Sheet had been executed, and advised the Court that the Term Sheet would be superseded by a formal settlement agreement. ECF No. 116.

The parties negotiated the Deutsche Bank Settlement Agreement over the course of the next several months. The negotiations over the terms of the Deutsche Bank Settlement Agreement included  various material terms over which the parties had substantial disagreement, requiring significant give and take on both sides. To that end, drafts of the Deutsche Bank Settlement Agreement went back and forth between the parties, and numerous contested issues were raised, negotiated and resolved, including without limitation, continuing negotiations over the scope of Deutsche Bank’s cooperation (see ¶ 4(A)-(G)), the scope of the releases (see ¶ 12 (A)-(C)), and the circumstances under which the parties could terminate the Settlement (see ¶ 21).

Thus, the Deutsche Bank Settlement Agreement, which was executed (along with the Supplemental Agreement) on September 6, 2016, was the culmination of arm’s-length settlement negotiations that had extended over many months.

The Deutsche Bank Settlement was not the product of collusion. Before any financial numbers were discussed in the settlement negotiations and before any demand or counter-offer was ever made, we were well informed about the legal risks, factual uncertainties, potential damages, and other aspects of the strengths and weaknesses of the claims against Deutsche Bank.

The Deutsche Bank Settlement involves a structure and terms that are common in class action settlements in this District. The consideration that Deutsche Bank has agreed to pay is within the range of that which may be found to be fair, reasonable, and adequate at final approval.

There was just one thing missing: the settlement amount. Then, on October 17, the first part of the answer was revealed when according to court filings, Deutsche Bank had agreed to pay $38 million to settle the silver manipulation litigation.
The settlement, which was disclosed in papers filed in Manhattan federal court, concludes one of many recent lawsuits in which investors have accused banks of conspiring to rig the precious metal markets. However, until Deutsche Bank's payment of $38 million to settle silver manipulation allegations, there was never any formal closure.
* * *
Then, last night, two months after the silver settlement, Deutsche Bank agreed to pay another $60 million to settle the other side of the antitrust litigation: that of rigging gold.
As Reuters first reported, the preliminary settlement was filed on Friday with the U.S. District Court in Manhattan, and requires a judge's approval. As part of the settelement, Deutsche Bank has denied any wrongdoing, and with the two settlements, and some $98 million out of pocket, it is clear of any future liability regarding precious metals manipulation.
The case is one of many in the Manhattan court in which investors accused banks of conspiring to rig rates and prices in financial and commodities markets.
As we reported previously, in an Oct. 3 decision, U.S. District Judge Valerie Caproni in Manhattan said investors could pursue much of their lawsuit against the other four banks named in the anti-trust lawsuit which include Barclays, Bank of Nova Scotia, HSBC and Societe Generale.
In October, Vincent Briganti, a lawyer for the investors, said the silver settlement deal provides "substantial monetary compensation plus cooperation from Deutsche Bank in the continued prosecution of this important case against the non-settling defendants." He has yet to comment on the gold settlement. Alas, as a result of the settlement, yet another discovery process has been scuttled, preventing the public from having a glimpse into what really went on in precious metal "markets."
* * *
So who gets to benefit from the settlement? This is what the lawyer said on the silver settlement disclosed in early October:

We have reason to believe that there are at least hundreds of geographically dispersed persons and entities that fall within the Settlement Class definition. The Settlement Class includes traders of COMEX Silver Futures contracts, anyone who traded in physical silver based on the Silver Fix, and traders in various silver derivatives.

The same will likely be applicable to gold traders following Friday's monetary settlement.
The other beneficiary, of course, is the class of investors, people and "conspiracy theorists" who claimed all along that gold and silver were subject to rigging in various forms throughout the years. Well, you were right. However, we wouldn't hold much hope for getting any substantial monetary rewards. By the time the settlement is done, there will likely be at best a few hundred dollars left per claimant.
The good news is that this formal closure will open the door for other, similar lawsuits - for both silver and gold manipulation - now that the seal has been broken.

 http://www.zerohedge.com/news/2016-12-03/deutsche-bank-pays-60-million-settle-gold-manipulation-lawsuit

Precious Metals Fixing and Suppression, defendants in court

No price discovery, mark to market, or true value because the coven of the London gold fix decide when to steal and control

Exclusive: Judge Rules on London Gold Fix Manipulation case

MarketSlant has obtained documents regarding the London Gold Fix Scandal currently being litigated in the New York Southern District Court.
They include the Judge's initial findings in the class action suit pitting the LBMA and its member Banks vs. Entities and Individuals that trade Gold and allege they were victims of price manipulation and suppression from January 1, 2004 to June 30, 2013
In the document dated Oct 3, 2016, presiding Judge Valerie Caproni of the US District Court, Southern District rendered her Opinion and Order in the matter. Judge Caproni has validated that much of the claims have been substantiated and therefore is recommending litigation for many of the claims brought
MS has enlisted the help of contributor and Market Structure/Trading Forensics expert Vince Lanci to summarize the document for us.The complete document follows the summary at bottom.
- submitted and edited by Soren K.

Our Source

We received the document asa courtesy from Kitco News' Chief editor "Dani". The Editor refused to reveal the origin source of the document. As beneficiaries of Kitco linking to our Metals stories, we at MS are greatly appreciative of the chance to drill down on this document.
First we intend to lay out the facts for readers. Observations, opinions and analysis will follow as we become more familiar with the nuances involved.

Document Summary

written by Vince Lanci | The ruling covers the complexities of the case and what law in her opinion should be most important going forward. More importantly, she decides on the merit of the allegations and recommends dismissal or escalation.
The Judge has ordered that many of the allegations are valid for further inquiry and that litigation continue, with only the claims against UBS getting completely dismissed.
What follows is intended as a summary of the Facts of the case with no opinion or bias intended at this time.
MS and Vince will be following the case closely with the help of legal experts to decipher and handicap the case as we drill down on the law, merits, and likely outcomes.

 

Who is Involved?

The Defendants

1. UBS AG and UBS Securities LLC (together, "UBS");
2. The London Gold Market Fixing Ltd. ("LGMF");
3. the five LGMF fixing banks during the Class Period:
   1. The Bank of Nova Scotia ("BNS")
   2. Barclays
   3. Deutsche Bank
   4. HSBC
   5. Société Générale (collectively, the "Fixing Banks").

The Plaintiffs
Individuals and entities that sold physical gold, gold futures traded on the Commodity Exchange, Inc. ("COMEX") market,shares in gold exchange-traded funds ("ETFs"), or options on gold ETFs during the Class Period.

What are the defendants accused of?

The Plaintiffs Allege:

1-Defendants colluded artificially to suppress the price of gold in several ways:

1. First, leading up to the London PM Fixing, Defendants allegedly collected confidential client order information and then improperly shared that information amongst themselves in order to compare and coordinate the execution of particularly large sell trades, thereby driving down the gold spot price immediately before and during the Fixing call
2. Plaintiffs further allege that Defendants used manipulative trading tactics:
   1. "Giving Ammo" - building orders by transferring them between fellow conspirators
   2. "Painting the Screen"- placing fake orders to give the illusion of activity and then cancelling the orders when the fixing window closed
   3. "Spoofing"- placing large orders that are never executed
   4. "Wash Sales"-placing large orders that are executed then quickly reversed
   5. "Front Running"- of customer orders in order artificially to suppress the price

2-Defendants Caused Price Distortions Around the Gold Fixing

1. A basic premise of Plaintiffs' argument is that, absent collusion or manipulation, trading around the PM Fixing would have been "random" in the sense that gold prices would have been equally likely to move up or down around the PM Fixing
2. Instead, from 2001 through 2012, the spot price of gold moved downward around the Gold Fixing much more frequently than it moved upward.

3-Defendants Profited From Manipulating the Fix Price

1. First, Plaintiffs generally allege that Defendants used their foreknowledge of downward swings in the Fix Price to make advantageous trades across a variety of Gold Investments.
2. Defendants' manipulation of the PM Fixing gave them an unfair advantage over counterparties that were not also Fixing Banks by reducing their risk in "digital options" and other contracts with market-based triggers, such as "stop loss" orders and margin calls

 

Deutsche Bank Settles Prior to the Ruling

Plaintiffs notified the Court that they had reached a settlement with Deutsche Bank, although no motion for approval of a Settlement Class has yet been presented to the Court
Defendant Deutsche Bank was a LGMF member until May 2014 when it resigned its seat after trying, but failing, to sell the seat to another institution in the wake of an investigation by German regulators into potential manipulation in the precious metals markets.

What is the Defenses' Argument?

In Summary, The Fixing Banks argue that, because Plaintiffs fail to allege that they transacted at a specific time in the trading day when the impact of Defendants' alleged manipulation persisted, Plaintiffs "fail to allege that they ever 'engaged in a transaction at a time during which prices were artificial,'" and therefore have not asserted an injury-in-fact. other arguments involving statute limitations and plaintiffs not being market "enforcers" are relevant.

What do the Plaintiffs want done?

Plaintiff's Seek From the Court:

1. to recover losses suffered as a result of Defendants' alleged manipulation and suppression of the price of gold through the gold "fixing" process
2.  putative claims for
   1. unlawful restraint of trade in violation of Section 1 of the Sherman Act
   2. market manipulation in violation of the Commodity Exchange Act (CEA)
   3. employment of a manipulative or deceptive device and false reporting in violation of CEA and CFTC rules
   4. principal-agent liability in violation of the CEA
   5. aiding and abetting manipulation in violation of the CEA
   6. unjust enrichment.

Summary of Judge's Opinion and Order

Judge  Caproni gives opinions on the relevant law intended  to explain and rationalize her decisons. Those are largely on the first page of the decision. More Factually, she decides what, if any allegations have merit for further litigation. These are her decisions- VBL
1.      UBS's Motion to DISMISS is GRANTED in its entirety
2.      Fixing Banks' Motion to Dismiss is GRANTED IN PART and DENIED IN PART
a.      GRANTED on Plaintiffs' claim for unlawful restraint of trade December 31, 2005, and from January 1, 2013
b.      GRANTED with respect to Plaintiffs' manipulative device claims
c.      DENIED with respect to Plaintiffs' antitrust claims for unlawful restraint of trade from January 1, 2006 through December 13, 2012
3.      LGMF's Motion to Dismiss is:

1. DENIED with respect to personal jurisdiction
2. GRANTED IN PART and DENIED IN PART to the same extent as the Fixing Banks' Motion to Dismiss.

MovingFroward

• MS intends to stay on top of this case to the extent we are permitted.
• It is our intention to have a representative in court on October 28th for updates and continued reporting as the situation unfolds.
• We will continue to enlist Vince's assistance navigatingthe labarynth of accusations adn merits, wiht opinions rendered as we become intimate with the case
• Our staff has access to colleagues familiar with the governing law here, who will assist us in understanding to the laws, burden of proof, legal tactics used, and implications of decisions.

Significant Upcoming Dates

1. Plaintiffs' deadline to show good cause why leave to replead should be granted is October 17, 2016
2. The parties, together with the parties in In re Silver Fixing, Ltd., Antitrust Litig., must meet and confer regarding a proposed schedule for discovery and class certification.
3. The parties are required to submit a joint proposal (if possible) or separate proposals (if a joint proposal is not possible) by October 21, 2016
4. The parties must appear for a pretrial conference on October 28, 2016 at 3:00 p.m. in New York

Golden Opportunity Trading: Gold: the reality gold bugs never want to face, CONTRACTION BY MANIPULATION

Golden Opportunity Trading: Gold: About to take a break?: About a month ago we noted that " Currently Gold is in a resistance zone (1300-1400) and hitting 1/2 Gann angle from the recent bear m...

First Silver, Now Gold: Deutsche Bank Admits It Also Rigged Gold Prices

Of course it's rigged. The whole commodities games is rigged. Same with equities, everything. There is no price discovery, mark to market, or any other supply and demand. That's been a fiction since the 1930s. Anyone with half a brain who honestly sees what's going on knows this.

you think this happens organically by market forces? Then you are not ready to swim in the adult pool yet, sorry.

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Earlier today when we reported the stunning news that DB has decided to "turn" against the precious metals manipulation cartel by first settling a long-running silver price fixing lawsuit which in addition to "valuable monetary consideration" said it would expose the other banks' rigging having also "agreed to provide cooperation to plaintiffs, including the production of instant messages, and other electronic communications, as part of the settlement" we said "since this is just one of many lawsuits filed over the past two years in Manhattan federal court in which investors accused banks of conspiring to rig rates or prices in financial and commodities markets, we expect that now that DB has "turned" that much more curious information about precious metals rigging will emerge, and will confirm what the "bugs" had said all along: that the precious metals market has been rigged all along."
This was confirmed moments ago when Reuters reported that Deutsche Bank has also reached a settlement in US litigation alleging the bank conspired to fix gold prices. In other words, hours after admitting it was rigging the silver market, it did the same for gold.
Some more headlines from Reuters:

• Reaches settlement in U.S. litigation alleging it conspired to fix gold prices.
• Plaintiffs' lawyers, in filing, say Deutsche Bank has signed a settlement term sheet
• Plaintiffs' lawyers say are negotiating formal settlement agreement that would be presented for judge's approval later
• Plaintiffs' lawyers say settlement contemplates a monetary payment by Deutsche Bank
• Gold settlement follows similar accord involving alleged silver price-fixing that was disclosed on Wednesday

 http://www.zerohedge.com/news/2016-04-14/first-silver-now-gold-deutsche-bank-admits-it-also-rigged-gold-prices-legal-settleme