10 Major Banks Under Investigation for Rigging Gold Prices

The Wall Street Journal has reported that the Department of Justice and the Commodity Futures Trading Commission are currently investigating at least 10 major banks for their role in the rigging of precious metals prices.

Department of Justice Prosecutors are examining the processes for the price-setting of gold, silver, platinum, and palladium in London, and the CFTC has opened a civil suit on the matter.

Goldman Sachs, JP Morgan Chase, UBS, HSBC, Bank of Nova Scotia, Credit Suisse, Barclays, Deutsche Bank, Standard Bank, and Soceite Generale were all banks that were named as being under investigation.

None of the banks responded to comment on the allegations.

The gold fix is a twice-daily agreed-upon gold price that provides a convenient benchmark for gold transactions. It has been in place since 1919 and was originally conducted in the offices of N.M. Rothschild and Sons until 2004 when the process was switched to a secure telephone conference call. 

Currently the London Gold Fix is operated by the Bank of Nova Scotia, HSBC, Societe Generale, and Barclays. Deutsche Bank participated in the process for nearly two decades before withdrawing in May of 2014. A new administrator of the London Gold Fix, ICE Benchmark Association, was announced in November of last year and will take over the pricing after March 20th. 

Subpoenas have already been issued by the CFTC to at least one bank, HSBC, requesting documents relating to its precious metals trading. HSBC also stated that they had been asked to hand over information to the Justice Department and that they are cooperating with investigators. 

Last year, UBS was found guilty of foreign-currency manipulation by Swiss regulator Finma and a separate lawsuit was filed in New York alleging that gold price manipulation has been occurring among major banks for decades.

Barlcays Plc was fined 26 million pounds in May 2014 for allowing a trader to manipulate gold prices. 

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