US: Appeals court revives JPMorgan silver futures rigging lawsuits

A US appeals court on Wednesday revived three private antitrust lawsuits accusing JPMorgan Chase of rigging a market for silver futures contracts traded on COMEX.

The 2nd US Circuit Court of Appeals in New York said a lower court judge held hedge fund manager Daniel Shak and two other traders to an excessively high legal standard when deciding last June 29 to dismiss their complaints.

Shak, Mark Grumet and Thomas Wacker accused the largest US bank of having in late 2010 and early 2011 placed artificial bids on the trading floor, harangued staff at metals market COMEX to obtain prices it wanted, and made misrepresentations to a committee that set settlement prices.

In Wednesday’s unsigned decision, a three-judge panel rejected US District Judge Paul Engelmayer’s finding that the traders did not adequately show that JPMorgan made “uneconomic” bids, or intended to rig the market.

The panel said Engelmayer demanded too much detail, including specific transaction terms and the identities of JPMorgan’s counterparties.

It also said Engelmayer engaged in “impermissible fact-finding” by objecting to the plaintiffs’ use of the 12-month Silver Indicative Forward Mid Rates as a benchmark for determining proper spread levels.

“We hold that plaintiffs adequately pleaded ‘willful acquisition or maintenance of monopoly power’ to sustain an antitrust claim,” the appeals court panel said.

The traders said this forced them to post more capital to support their positions in silver futures spreads, and ultimately to liquidate them at heavy losses.

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