Traders Accuse HSBC, JPMorgan of Silver Manipulation


"Suits allege that the two banking giants amassed 'enormous short positions.'"

Two traders have accused HSBC and JPMorgan Chase of manipulating the price of gold's smaller cousin, silver, in separate lawsuits filed in a Manhattan federal court Wednesday.

The suits allege that the two banking giants amassed "enormous short positions," and follow an investigation by the Commodity Futures Trading Commission (CFTC) ongoing since 2008.

Filed by U.S. traders, Peter Laskaris and Brian Beatty, the lawsuits also date back to 2008, according to press reports. Laskaris alleges that the banks colluded on the silver futures market and let each other know about large trades, placing "spoof" trading orders.

By working together to suppress silver futures, their call options, which represent the right to buy, would decline, making their short positions more lucrative, according to Laskaris' suit. Beatty claims to have been hurt by anticompetitive acts and market manipulation.

HSBC's press office in London could not be reached for comment.

Silver, known as "the devil's metal" among traders, has seen futures prices rise dramatically from $10 an ounce two years ago to about $24 this month.

HSBC's managing director of Global Metals and Trading, John Levin, has commented that hedge funds love silver's volatility, but then "get carried out on a stretcher" when they try to trade it.

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