I am no legal expert, and therefore have no idea of the merits of this
as a prospective case. The law involves things like intent,
opportunity, evidentiary proof, and so forth. Apparently one can
sue another entity for just about anything, but that does not mean that the
case has any merit. And I certainly could not advance such a case
based on even industry knowledge. That strikes to the heart of my own issue.
My primary concern is a lack of transparency. And that lack of
transparency in these markets is not conducive to market
efficiency. It allows for gaming the system, either occasionally
or, as we have seen, systematically.
I cannot tell if these markets are manipulated because so much of what is
being done is hidden. And it does not help that the CFTC conducted a
five year long study into the subject, and then quietly killed it without
ever having issued any information about their findings.
Some have shown evidence they say that proves that it is the tech funds that
set price, and that JPM is just 'making a market.' If this is true, then
additional transparency on the part of JPM and the other market makers would
be perfectly reasonable to allay any doubts about the honesty and fairness of
the markets for precious metals. This is why the people have
established, and paid for, regulators. So they do not have to resort to
lawsuits in order to achieve justice and equity in their transactions.
Considering the widespread rigging of key benchmarks and prices, I think to
just dismiss these concerns with a sneer and a snigger is
unreasonable, requiring people to maintain an almost slavish belief
in the integrity of the Banks, trading desks, and the system.
Given the amount of abuse that has been exposed already along these same
lines, that does not seem to be a thing that a thinking person would ask.
The major objection to transparency, by the way, is that it would diminish
the profits of those in the position of market makers. Well, market
making is intended to be a utility function, with a small but regular
return. It is not appropriate for market making to be in the hands of
those who are also major market players. It is a certain invitation to
corruption.
One of the more general things that struck home in this commentary by Ted is
the concern that the Comex is becoming like a bucket shop, a betting
parlor that is at arms length from the markets for which they are presumably
setting prices. The lack of delivery and the ability to create
large amounts of contracts to receive or deliver on the fly, and then to
transact them at whatever price you wish without seeming constraint if
you are big enough, with deep enough pockets and enough advantageous
information, is tantamount to setting up a con game, and then trusting in men
to be angels.
Relying on self-regulation, under the discipline of private lawsuits, merely
reinforces our increasingly bifurcated society, in which a
small minority have ease and rights and freedom and even
justice, because they can afford it. And those many who rely on
the justice provided by government will be faced with an upward facing
and unresponsive bureaucracy, and with that, hard times. Like
quality Healthcare, there will be Justice, for some.
As you know I am no longer hopeful of change in the short term, given the
nature of the credibility trap that has encompassed the political party
process and the mainstream media. To paraphrase the discouragement pessimism
of Czech author and political figure Václav Havel:
“No attempt at reform could ever hope to
set up even a minimum of resonance in the rest of society, because that
society is ‘soporific,’ submerged in a consumer rat race... Even if reform
were possible, however, it would remain the solitary gesture of a few
isolated individuals, and they would be opposed not only by a gigantic
apparatus of national (and supranational) power, but also by the very society
in whose name they were mounting their reform in the first place.”
It
is no accident that the nascent movements for financial reform were either
ruthlessly crushed, as in the case of the almost rudderless Occupy Wall
Street, or co-opted by money and politics, as unfortunately happened with the
Tea Party. Co-opt if you can, crush if you must.
Ted presents some of the facts in the contrary case, and I found them to be
interesting. It is hard to believe that the London Fix is so corrupt,
but the Comex, which is the major pricing platform, is pristine, since the
players are playing across all global markets.
Suing
JPMorgan and the COMEX
Theodore Butler|
March 21, 2014
I’ve had some recent conversations with attorneys who were considering
class-action lawsuits regarding a gold price manipulation stemming from
reports about the London Gold Fix. I told them that while there is no doubt
that gold and, particularly, silver are manipulated in price, I didn’t see
how the manipulation stemmed from the London Fix. I wished them well and
hoped that they may prevail (the enemy of my enemy is my friend), because you
never know – if the lawyers dig deep enough they might find the real source
of the gold and silver manipulation, namely, the COMEX (owned by the CME
Group) and JPMorgan.
So I thought it might be constructive to lay out what I thought a successful
lawsuit might look like, although I’m speaking as a precious metals analyst
and not as a lawyer. I’ll try to put the whole thing into proper perspective,
including the premise and scope of the manipulation as well as the parties
involved...
Read the entire article for free here.
