HSBC Holdings Plc and JPMorgan Chase & Co. allegedly placed “spoof” trading orders to manipulate silver futures and options prices in violation of U.S. antitrust law, according to a Bloomberg News article carried by InvestmentNews, “JPMorgan placed ‘spoof’ orders to drive down silver prices: Suit.”
A recent investor-filed lawsuit filed in U.S. District Court in Manhattan alleges that commencing in March 2008, HSBC and JPMorgan worked together to cause silver futures and call options to decline in value or expire worthless, and put options to increase.
Spoof trading orders were described in the complaint as the “submission of a large order which is not executed but influences prices and is then withdrawn before it reasonably can be executed,” according to the article.
According to another recent investor-filed complaint against HSBC and JPMorgan, a whistleblower contacted the CFTC last year and reported the banks’ collusive activities to manipulate the silver futures market and profit from “enormous” short positions in silver futures.
In September 2008, the Commodity Futures Trading Commission began investigating alleged price manipulation in the silver futures market. At a hearing in Washington on Oct. 27, CFTC Commissioner Bart Chilton was quoted as saying that there have been “fraudulent efforts to persuade and deviously control” silver prices and that violators should be prosecuted.
In reaction to the government investigation, the banks reduced their collusive trading and prices have since risen by about 50 percent, the reportedly suit alleges.
“These price changes directly result, at least in one substantial part, from defendants’ reduction in their concentration and other reductions of their unlawful activities in the silver markets since the government investigation,” according to one of the complaints.
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