Feds launch criminal probe of alleged JPMorgan silver market manipulation - report
The DOJ and the CFTC are reportedly investigating if JPMorgan conspired to depress the price of silver through precious metals trading on the London Bullion Exchange and future derivative trades on NYMEX.
Posted: Monday , 10 May 2010
RENO, NV -
The Department of Justice and the Commodity Futures Trading Commission have launched parallel criminal and civil investigations of JP Morgan Chase and its trading activity in the silver market, the New York Post reported Sunday.
Quoting unidentified sources, the Post reported, "The probes are centering on whether or not JP Morgan, a top derivatives holder in precious metals, acted improperly to depress the price of silver."
"The probes are far-ranging, with federal officials looking into JP Morgan's precious metals trades on the London Bullion Market Association's (LBMA) exchange, which is a physical delivery market, and the New York Mercantile Exchange (NYMEX) for future paper derivative trades."
The Office of the Comptroller of the Currency in the U.S. Department of the Treasury said JP Morgan increased its silver derivative holdings by $6.76 billion, or about 220 million ounces, during the last three months of 2009.
Sources told the Post that regulators are pulling trading tickets on JPMorgan's precious metals activities on all the exchanges as part of the investigations.
The investigation apparently was generated by allegations made by London metals trader Andrew Maguire, who contacted the Gold Anti Trust Association (GATA) regarding alleged rigging of the precious metals market by JPMorgan among others, through shorting the markets around key economic data releases.
In November 2009 Maguire had contacted the CFTC enforcement division to report what he considered criminal activity. Maguire contacted GATA Director Adrian Douglas in March 2010. In testimony in March before the CFTC, GATA's Bill Murphy said, "He described in detail the way JP Morgan Chase signals to the market its intention to take down the precious metals. Traders recognize these signals and make money shorting the metals alongside JPM. Maguire explained how there are routine market manipulations at the time of option expiry, non-farm payroll data releases, and COMEX contract rollover, as well as the ad-hoc events."
In an interview with the Post last month, Maguire said, "JPMorgan acts as an agent for the Federal Reserve; they act to halt the rise of gold and silver against the U.S. dollar. JPMorgan is insulated from potential losses [on their short positions] by the Fed and/or the U.S. taxpayers."
In a story published March 29, 2010, Mineweb's Lawrence Williams wrote, "This may be the first actual evidence of a real time manipulation effort by one of the major players assuming the emails and statements are accurate and comprehensive."
"If true, this is worrying in particular for the investor in precious metals and ranks alongside some of the high speed computer trading programs which make it virtually impossible for the smaller investor to compete with the big boys," Williams said.