Judge Dismisses Silver-Rigging Lawsuits Against JP MorganBy Kitco News
Thursday June 30, 2016 09:14
(Kitco News) - A U.S. district court judge has dismissed three private lawsuits accusing JP Morgan Chase & Co. of rigging the market in Comex silver futures, according to a Reuters report.
The lawsuits alleged that in late 2010 and early 2011, JP Morgan placed artificial bids, harangued employees at Comex to obtain prices it wanted, and made misrepresentations to a committee that set settlement prices, according the late-Wednesday report from Reuters.
This allegedly squeezed traders, including hedge-fund manager Daniel Shak, according to Reuters. This ultimately led to them liquidating positions at losses.
However, U.S. District Judge Paul Engelmayer in Manhattan said the plaintiffs did not show that JP Morgan made "uneconomic" bids or intentionally rigged the market at counterparties' expense. He also questioned the plaintiffs' use of Silver Indicative Forward Mid Rates (SIFO) as a benchmark, the report said.
"Given the (lawsuits') failure both to explain why SIFO should track silver futures spreads, and to concretely plead that it did so consistently, a mere general correlation between these two is not sufficient to make SIFO a reliable benchmark such that deviations from it support a claim of irrational pricing animated by anticompetitive aims," Engelmayer wrote.
Reuters reported that the dismissal of the lawsuits was with prejudice, meaning the suits cannot be brought again.