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An updated complaint in the class-action lawsuit
against JPMorganChase alleging manipulation of the
silver futures market, filed this week in U.S. District Court for the
Southern District of New York, details the mechanisms of the manipulation and
some of the traders executing it.
According to the updated complaint:
-- MorganChase already had
a large short position in silver when it acquired another large short
position upon the investment house's acquisition of the failed New York
brokerage Bear Stearns in 2008. This, the complaint says, gave MorganChase hugely disproportionate influence in the
silver market.
-- MorganChase used
"fake" and "spoof" trades to manipulate prices downward,
particularly in advance of contract expiration dates, when MorganChase held put options, which became more valuable
as the price of silver was driven down.
-- MorganChase reduced its
short position following the May 25, 2010, hearing of the U.S. Commodity
Futures Trading Commission, in which complaints of gold and silver market
manipulation figured heavily. (GATA Chairman Bill Murphy and board member
Adrian Douglas testified at that hearing and presented a statement by a
London silver futures trader, Andrew Maguire, detailing market manipulation
he had witnessed.)
-- MorganChase regularly
engaged in uneconomic trading activity in silver whose only purpose was price
manipulation.
-- The CFTC received a detailed complaint about
silver market manipulation from a "whistleblower" (this is
presumably Maguire).
--Market circumstances during the period of
manipulation alleged by the lawsuit were much different from the
circumstances previously investigated by the CFTC when it concluded that
there had been no manipulation.
While these are all only allegations, the silver
price manipulation case against MorganChase is now
extensively detailed with names of participants, specific actions and their
dates, and identities of participants. Market experts no doubt will find much
more of signifance in the consolidated complaint.
King World News has just published a summary of the
consolidated complaint here:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/9/16_Id...
The full complaint can be found at GATA's Internet
site here:
http://www.gata.org/files/ConsolidatedSilverC...aint-09-12-2...
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