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10:14p ET Sunday, April 17, 2016
What do Deutsche Bank's confession to gold and silver market rigging and
its pledge to incriminate other bullion banks mean?
Almost certainly they mean more litigation on top of the federal
class-action lawsuit in New York that prompted the confession and pledge.
Beyond that it's anyone's guess.
Of course gold traders, investors, and gold and silver mining companies
and their investors are wondering what's in it for them. That's hard to say.
Ordinarily in a successful class-action lawsuit the court devises
remediation that is available to everyone affected by the misconduct at issue
in the suit -- available not just to the plaintiffs named in the suit but to everyone
similarly situated, everyone damaged by the misconduct. Once the court
settles on such remediation, its availability is publicized to potential
members of the class and they are invited to register with the court so they
may be paid. So no one has to become a plaintiff in the suit to receive
damages.
But the focus of the Deutsche Bank class action seems to be narrow; it
involves those who traded gold and silver on exchanges like the New York
Commodities Exchange. It does not seem to cover trading and valuations that
took place outside such exchanges, though of course other gold and silver
transactions and the trading of the shares of gold and silver mining
companies well may have been heavily influenced by the trading covered in the
lawsuit.
For example, shareholders who were wiped out by the bankruptcy of Allied
Nevada Gold Corp. a year ago have to be wondering whether the gold and silver
market manipulation to which Deutsche Bank has admitted and in which the
bank's associates also may have been involved harmed their investment and
entitles them to damages. Indeed, shareholders of any gold or silver
mining company must wonder whether Deutsche Bank and the other banks should
be liable to them for damages as well.
Those concerns seem to go beyond the scope of the current class-action
lawsuit. But once the court in that lawsuit puts substantial evidence on the
record or makes a formal finding, all sorts of gold and silver investors and
mining companies may do well to engage their own legal counsel to explore
their options.
(If only gold and silver mining companies cared about the rigging of the
markets for their products, or even understood the true nature of their
products as money. If any mining company has even noted the development with
Deutsche Bank, there is as yet no evidence of it.)
Deutsche Bank may not be culpable enough to be obliged to make whole every
gold and silver investor and mining company in the world, but if enough other
big banks are incriminated, they may create a target rich enough to invite
many other lawsuits, individual and class-action.
Of course the bigger issue for GATA is whether the class-action suit
against Deutsche Bank and the other banks alleged to have manipulated the
gold and silver markets will expose the intervention of central banks,
directly or through intermediaries. That is, for example, were Deutsche Bank
and the other accused banks ever trading on behalf of central banks and
front-running those central bank trades?
For reprehensible and illegal as it is, market rigging by big traders is
not so unusual and tyrannical as surreptitious trading by central banks. For
the world's sake, the latter sort of market rigging needs far more exposure.
