The banks, among the world’s largest, were accused of
manipulating the market for COMEX silver futures and options contracts from the
first half of 2008 by amassing huge “short” positions in silver futures
contracts that are designed to profit when prices fall.
“Defendants reaped hundreds of millions of dollars, if not
billions of dollars in profits” from the conspiracy, one of the complaints
said.
The respective plaintiffs, Brian Beatty and Peter Laskaris,
each said they traded COMEX silver futures and options and contracts, and lost
money because of the alleged market manipulation.
Beatty lives in Connecticut and Laskaris in New York, court
records showed. The lawsuits seek class-action status, treble damages, and
other remedies.
Spokeswomen for JPMorgan and HSBC did not immediately return
calls seeking comment. Both are major participants in the silver market.
The lawsuits were filed one day after the Commodity Futures
Trading Commission proposed regulations to give it greater power to thwart
traders who try to manipulate prices.
CFTC Chairman Gary Gensler said the regulator was seeking
power to police “fraud-based manipulation.”
Commissioner Bart Chilton said there had been “fraudulent
efforts to persuade and deviously control” silver prices.
The CFTC began probing allegations of silver price
manipulation in September 2008. A CFTC spokesman said the agency does not
comment on ongoing investigations.
Only once in its 36-year history has the CFTC successfully
concluded a manipulation prosecution, in a 1998 proceeding concerning prices
for electricity futures.
Earlier this year, the CFTC began looking into allegations
by a London trader that JPMorgan was involved in manipulative silver trading,
The Wall Street Journal said on Wednesday, citing a person close to the situation.
Silver prices have faced regulatory scrutiny in the past,
perhaps most prominently after the Hunt brothers in Texas in 1980 attempted to
corner the market, driving prices above $50 an ounce. The price later plunged.
Since the CFTC began its probe, spot silver prices have
ranged between $8.42 and $24.90 an ounce, Reuters data show. They traded
Wednesday at roughly $23.55. Silver futures prices are up 39.1 percent this
year.
The cases are Beatty v. JPMorgan Chase & Co et al, US
District Court, Southern District of New York, No. 10-08146, and Laskaris v.
JPMorgan Chase & Co et al in the same court, No. 10-01857. Case documents
were not immediately available.