NEW YORK (Reuters) - JPMorgan Chase & Co on Wednesday won the dismissal of three private antitrust lawsuits, including from hedge fund manager Daniel Shak, accusing the largest U.S. bank of rigging a market for silver futures contracts traded on COMEX.
The lawsuits accused JPMorgan of having in late 2010 and early 2011 placed artificial bids onto the trading floor, harangued employees at metals market COMEX to obtain prices it wanted, and made misrepresentations to a committee that set settlement prices.
This allegedly squeezed traders like Shak, who is also known for playing high-stakes poker, forcing them to post more capital to support their positions in silver futures spreads, and ultimately liquidate them at heavy losses.
U.S. District Judge Paul Engelmayer in Manhattan, however, said the plaintiffs, who also included traders Mark Grumet and Thomas Wacker, did not show that JPMorgan made “uneconomic” bids, or intended to rig the market at counterparties’ expense.
He also questioned the plaintiffs’ use of Silver Indicative Forward Mid Rates (“SIFO”) as a benchmark for determining proper levels for the spreads in their lawsuits.
“Given the (lawsuits’) failure both to explain why SIFO should track silver futures spreads, and to concretely plead that it did so consistently, a mere general correlation between these two is not sufficient to make SIFO a reliable benchmark such that deviations from it support a claim of irrational pricing animated by anticompetitive aims,” Engelmayer wrote.
David Kovel, a lawyer for the plaintiffs, declined to comment. Brian Marchiony, a JPMorgan spokesman, said the bank is pleased with the decision.
Engelmayer’s dismissal was with prejudice, meaning the lawsuits cannot be brought again.
JPMorgan has also prevailed in other silver litigation, including in March 2014 when the federal appeals court in Manhattan rejected investor claims in a nationwide lawsuit that the bank intended to drive prices down.
The cases in the U.S. District Court, Southern District of New York, are Shak et al v. JPMorgan Chase & Co et al, No. 15-00992; Wacker v. JPMorgan Chase & Co et al, No. 15-00994; and Grumet v. JPMorgan Chase & Co et al, No. 15-00995.
Reporting by Jonathan Stempel in New York; Editing by Andrew Hay