Guilty: Deutsche Bank Implicates UBS, HSBC, Scotia Bank and More

• Deutsche Bank's settlement included correspondence between other banks
• Barclays, UBS, BOA, HSBC, Scotia all involved

Summary

Deutsche Bank AG's early settlement in the Gold and Silver Rigging trial has provided prosecutors with smoking gun evidence that not only proves their case, but implicates even more banks in the manipulation of Gold and Silver. It also paves the way from where we stand for a RICO case.

UBS Group AG, HSBC Holdings Plc, Bank of Nova Scotia and others are implicated in rigging the Gold and Silver LME markets. The documents show communication between traders in different banks discussing ways to affect the market.

Written by Soren K. and the Soren K Writing Group, and Vince Lanci of Echobay Partners

The Plaintiff's Lawyer

"UBS was the third-largest market maker in the silver spot market and could directly influence the prices of silver financial instruments based on the sheer volume of silver it traded. "Conspiring with other large market makers, like Deutsche Bank and HSBC, only increased UBS’s ability to influence the market."

Deutsche Bank's Settlement as Starting Point

In our exclusive story from October 5th, we outlined the deal DB made and that it would likely lead ot pain for those not cutting deals:

Deutsche Bank Settles Prior to the Ruling

Plaintiffs notified the Court that they had reached a settlement with Deutsche Bank, although no motion for approval of a Settlement Class has yet been presented to the Court. Defendant Deutsche Bank was a LGMF member until May 2014 when it resigned its seat after trying, but failing, to sell the seat to another institution in the wake of an investigation by German regulators into potential manipulation in the precious metals markets.

Full article HERE

Deutsche Bank's Smoking Gun Emerges

The DB documents provided as part of the settlement show correspondence between UBS and DB traders discussing tacticalschemes to rig the market. These included sharing client order books, how to trigger client stop-loss orders on their own books, and the oversimplified but commonly used term "spoofing". Spoofing is essentially bluffed orders with no intention of honoring the bid or offer if called on it.

For our part, we've described how manipulation occurs manytimes. Lawyers just don't get it until it is staring them in the face. Finally, it is. What was done for years here is repulsive and unconscionable. And it went on for decades because themarkets were small enough that "noone cared" adn that banksalways ahd "bigger fish ot fry". In trading terms, those firms adn  their "compliance officers" ignored risk that far outstretched their profit potential. Ethics matter folks.

Deutsche Drops Dime on Co-Conspirators

According to plaintiff sources, DB provided written documentation and phone records implicating almost every other bank that touched the precious metals LME Fixing. Bloomberg confirms

BBG- According to the plaintiffs, records surrendered by Deutsche Bank show traders and submitters coordinating trades in advance of a daily phone call, manipulating the spot market for silver, conspiring to fix the spread on silver offered to customers and using illegal strategies to rig prices.

The Original Defendants Need to Make Room

The original accepted defendants were the 5 banks involved in the Precious metals fixes at LME. Deutsche cut a deal first, leaving the final four of Scotia, Barclays, HSBC, and Soc Gen.

1. the five LGMF fixing banks during the Class Period:
   1. The Bank of Nova Scotia ("BNS")
   2. Barclays
   3. Deutsche Bank
   4. HSBC
   5. Société Générale (collectively, the "Fixing Banks").

Note also, the original complaint failed to meet the burden of proof against UBS and they were exonerated. Well, UBS is neck deep now after DB's cooperation.

However, Deutsche bank provided other banks involved not originally on the docket. Further, they provided actual correspondence of not just IF, but HOW they would manipulate prices.

Original Complaint and Defendants to be Amended

We've no doubt, that given the info on UBS they will be reinstated as a liable defendant. Additional defendants will also be added. Finally, this in our opinion goes beyond Sherman anti-Trust now. It has RICO potential. Here is the original filing obtained by MS  October 3rd.

Bigger Complaint to be Filed- Barclays, Standard, BOA and others implicated

Based on the evidence, the plaintiffs now have in our opinion, a RICO case. This is beyond the  Sherman anti-trust case originally filed. Further, there are more co-conspirators than originally implicated. Newly accused firms include: Barclays, BNP, Standard Chartered, and BOA.

It would be easier to list the names of firms that did not participate in the rigging of precious metals markets during the LME fix.

“Plaintiffs are now able to plead with direct, ‘smoking gun’ evidence,’ including secret electronic chats involving silver traders and submitters across a number of financial institutions, a multi-year, well-coordinated and wide-ranging conspiracy to rig the prices,” the plaintiffs said in their filing. The new scheme “far surpasses the conspiracy alleged earlier.”

We could not agree more

The Rabbit Hole Deepens

And the Fix is what we can see and quantify. This speaks to nothing that is done outside of those tiny constrained parameters of the indictments.

The firms will all, no doubt claim they did not know of the activity of rogue traders. To that we say Bull. Internal calls are monitored and recorded, superiors are briefed on risks and anticipated activity going into the fix. No, this should escalate to department heads.

And this is far bigger than the LME fix. As we said before, if these banks can fix LiBOR, the biggest, deepest interest rate market globally, how hard is it to manipulate a market that can be cornered with $100 Billion? How hard is it to manipulate when there are no eyes watching outside the London Fix period? Not hard a tall. The rabbit hole is very deep here.

Lesser Evils Get Ranked- Sacrifices Will be  Made

As we said before, this is far from over. From our previous coverage attempting to "game" next events:

The Prisoner's Dilemma grid will come into play, even if nothing was done wrong. There will be triage as well. Banks are going to Scramble to prevent it from going up thefood chain.

1. Contempt over perjury
2. Perjury over fraud/ intent
3. Fine over jail
4. Rogue employee over Ceo scandal

There will be many bodies thrown under busses going forward if these banks are to preserve their executives. We also expect them to somehow redirect the blame ot the LME itself. And then we will see infighting like no other. Up until now we've been as dry as we can in reporting. but now, we cannot hide our happiness as these corrupt representatives of a corrupt market structure bet the veil pulled back on their fraud.

Why This is Far from Over

The law operates on facts, not intuition. That means inductive logic, patterns of abuse, and  circumstantial evidence don't prove intent. In manipulation cases, intent is the hardest leg to prove of the 3 legged stool concept in law.Judge Caproni said as much in her decision.   And Deutsche Bank just provided the hardest of all evidence to refute now: Factual proof of conspiracy. Now watch as other banks try to cut deals. And from there, distance themselves from traders and supervisors to protect the corporate heads of these firms. They, in our opinion are all guilty, and have been so for 30 years.

Previously on Marketslant

We were proud to break the story here with obtained documents. Read the following to get the whole picture

• EXCLUSIVE:Judge Orders Gold Manipulation Case Valid

• Part 2: How The Gold Manipulation Trial Will Unravel