Deutsche Bank documents discovered manipulation over silver market

Eight months after Deutsche Bank AG settled a lawsuit claiming it manipulated gold and silver prices, documents it disclosed as part of the accord provide “smoking gun” proof that UBS Group AG, HSBC Holdings Plc, Bank of Nova Scotia and other firms rigged the silver market, plaintiffs claim.

The newly cited evidence was produced by Deutsche Bank after it reached a $38 million settlement in the case earlier this year. The plaintiffs said the evidence showed the new defendants engaged in collusive price manipulation.

In the document records surrendered by Deutsche Bank and presented below, traders and submitters were captured coordinating trades in advance of a daily phone call, manipulating the spot market for silver, conspiring to fix the spread on silver offered to customers and using illegal strategies to rig prices.

According to Bloomberg, the plaintiffs allege that the documents "show traders and submitters coordinating trades in advance of a daily phone call, manipulating the spot market for silver, conspiring to fix the spread on silver offered to customers and using illegal strategies to rig prices."

UBS said in a statement that it believed the plaintiffs' claims had "no merit." Representatives for the other banks either declined to comment or did not respond to requests for comment.

A judge dismissed the lawsuit against UBS this year but allowed the plaintiffs to file a new complaint against the bank.

The Deutsche Bank documents show two UBS traders communicated directly with two Deutsche Bank traders and discussed ways to rig the market, the plaintiffs said. Among other things, the traders shared customer order-flow information, improperly triggered customer stop-loss orders, and engaged in practices such as spoofing. Spoofing entails submitting bids or offers with the intention of canceling them before they’re executed as a way to drive prices.

“UBS was the third-largest market maker in the silver spot market and could directly influence the prices of silver financial instruments based on the sheer volume of silver it traded,” the plaintiffs allege. “Conspiring with other large market makers, like Deutsche Bank and HSBC, only increased UBS’s ability to influence the market.”

That preliminary settlement was filed last Friday with the U.S. District Court in Manhattan, and requires a judge's approval. Deutsche Bank denied wrongdoing.