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Regal Group International: HSBC and JPMorgan in lawsuits over silver price manipulation.
HSBC Holdings Plc and JPMorgan Chase &Co. accused in an investor’s lawsuit for manipulating silver prices by amassing huge short positions.
The investor, Peter Laskaris, who is a New York trader of Comex silver futures and options contracts, alleges that beginning in early 2008, the two banks colluded to suppress silver futures so that call options, or the right to buy, would decrease, while options for the right to sell would increase. Laskaris also contends that the banks also colluded to maintain prices at levels at which certain options would expire as worthless.
"Defendants reaped hundreds of millions of dollars, if not billions of dollars in profits" from the conspiracy, Regal Financials believes one of complaints said.
The second complainant, Brian Beatty also a silver contracts trader claims he was unfairly hurt by anticompetitive acts and market manipulation. Beatty claims that last year a whistle blower contacted the Commodity Futures Trading Commission and reported the banks’ conspiracy to suppress prices of silver futures to profit from “enormous”
According to Laskaris’ complaint both banks significantly reduced their collusive trading and silver holdings in the futures arena at the start, in March, of a U.S government investigation into silver futures manipulation. Laskaris, who is seeking class-action status, alleges that since the banks cut back on their silver futures trading, the precious metal’s price has climbed by around 50%.
The lawsuits come only one day after the CFTC proposed regulations to give it greater power to prevent traders from manipulating prices.
CFTC Chairman Gary Gensler told Regal Group International that the regulator was seeking the power to police "fraud-based manipulation."
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