Metal Manipulators Prosecuted

We have in the past reported on, let’s say, ‘questionable’ market actions in gold and silver.  Futures trades allow large participants to make enormous trades without the underlying metal even coming into play.  We wrote about this here and here and revealed the prosecution of the participating banks.

Yet again the perpetrators of these crimes have been served some justice via a collaborative effort between the CFTC, DoJ, and FBI.  The 3 banks prosecuted were Deutsche Bank ($30m + remedial relief), UBS ($15m + remedial relief), and HSBC ($1.6m), and there were 6 individual traders (likely those laughing in the above transcript) also prosecuted for the ‘spoofing’ practices we outlined in the above links.  

In essence however, spoofing is the practice of placing large trades with the intention of cancelling them before execution but having already potentially dramatically moved the market and triggering stop loss orders.  They then come in and buy the very dip they create and also spoof the market higher.  Spoofing is a criminal offence though it appears they all got away with just fines.  Notably absent are any US banks, particular the one many believe are the kings of precious metals manipulation J P Morgan.  

As we wrote previously such practices have been a double edge sword.  For those metal holders needing to sell it has most likely cost them real money.  For those ready and able to buy, it has potentially been gift.  What this prosecution may now herald however is the days of such practices may be gone or coming to a timely end.