A New York-based trader has sued Scotiabank, Barclays Plc, Deutsche Bank AG, HSBC Holdings Plc and Societe Generale SA for alleged manipulation of the London gold fix, Financial Post said.
The London gold fix is currently being used as a benchmark through the $20 trillion metal market. The said benchmark had been used by the mining, jewelry industries and central banks to determine the value of metal.
Accordng to the lawsuit filed by Kevin Maher on Tuesday in a Manhattan federal court, he claimed that the five banks mentioned as defendants in the lawsuit conspired to fix the benchmark to suit their interests. Maher said that he has been buying and selling gold and gold-based securities like futures and options.
Financial Post said Maher's complaint points to several press reports, which include a story run by Bloomberg News last week based on a research draft by researchers who observed an unusual pattern in the prices in relation to the gold fix. The study is also insinuating that the benchmark manipulation by the five banks had been going in for decades. The online news site said that the study would be the first one who had looked into the possibility of benchmark manipulation of the five financial institutions.
New York University's Stern School of Business Professor Rosa Abrantes-Metz and Moody's Investors Service managing director Albert Metz wrote in their draft research paper that the trading patterns observed around 3PM in London suggested that the banks indeed had carried out the manipulation of the afternoon gold fix over a private conference call.
A Moody's spokesperson had said last week that Metz's paper was independent of the company and was of his own. Spokespeople of four of the five banks have refused to comment on the draft research paper, Financial Post said.
Spokeswoman Renee Calabro for Frankfurt- based Deutsche Bank said in an email, "We believe this suit is without merit and will vigorously defend against it." Spokespeople for Barclays and HSBC declined to comment on Maher's lawsuit, while the representatives of the two other banks were not able to immediately respond to requests for comment.
