Labaton Sucharow has an ongoing investigation into the manipulation of Gold, Silver, Platinum, and Palladium Futures, and related options on these futures contracts (collectively, “Precious Metals Futures and Options”) by JPMorgan and a former JPMorgan trader, John Edmonds. Labaton Sucharow is considering filing a class action on behalf of Precious Metals Futures and Options investors.
In this Alert, we provide: (1) an overview of the Precious Metals Futures and Options manipulation allegations and (2) Labaton Sucharow’s experience in litigating similar market manipulation actions on behalf of injured investors.
If you would like Labaton Sucharow to provide a preliminary assessment of any impact the manipulation may have had on your Precious Metals investments, please provide us, in electronic form, all Precious Metals Futures and Options transactions you entered into between January 2009 and December 2015.
Precious Metals Futures and Options Manipulation Overview
We are investigating allegations that JPMorgan and Mr. Edmonds engaged in spoofing and other unlawful trading practices that manipulated prices for Precious Metals Futures and Options traded on the Chicago Mercantile Exchange’s (“CME”) COMEX and NYMEX divisions. The Department of Justice (“DOJ”) recently charged Mr. Edmonds, for his participation in a multi-year scheme to manipulate Precious Metals Futures through spoofing. On October 9, 2018, Mr. Edmonds pleaded guilty to the charges against him.
Spoofing in this context is the practice of bidding (signaling intent to buy) or offering (signaling intent to sell) with the actual intent to cancel the bid or offer before execution. This type of manipulation is a particularly pernicious form of market manipulation because it preys on market participants’ reasonable expectations that published bids and offers reflect genuine buying and selling interests. Market participants generally view bids and offers as genuine expressions of trading interest, and they react to those bids and offers by adjusting their own trading positions accordingly. In effect, market participants are trading on the spoofer’s deceit, which in turn, distorts the asset’s market price.
Because market participants react to the spoofer’s spoof orders, the spoofer’s “genuine” orders are filled at better prices. For example, if the spoofer’s genuine order is to buy COMEX Gold Futures, by placing spoof orders on the sell-side, the spoofer will induce others to execute his buy order at a lower price than would otherwise be possible absent the spoof. Similarly, if the spoofer’s genuine order is to sell COMEX Gold Futures, by placing spoof orders on the buy-side, the spoofer will induce others to execute his sell order at a higher price than would otherwise be possible absent the spoof. And by spoofing both sides of the market, the spoofer reaps profit in the form of the spread between its executed buy and sell orders.
Precious Metals Futures and Options Affected by Manipulation
The following types of futures and options were potentially affected.
- Gold Futures (GC)
- Silver Futures (SI)
- Platinum Futures (PL)
- Palladium Futures (PA)
- Any options tied to the above-listed futures contracts
Our Firm Has Significant Experience Prosecuting Manipulation Cases
Labaton Sucharow brings the sophisticated resources of a top-tier firm, and has secured exceptional results for its clients. The Firm’s experienced trial counsel understand how to maximize recoveries, as well as how to effectively address issues concerning confidentiality, publicity, and discovery. Because Labaton Sucharow can draw upon its long experience prosecuting misconduct in financial markets involving manipulation and fraud, the Firm is particularly well situated to prosecute Commodity Exchange Act (“CEA”) claims against JPMorgan and Mr. Edmonds. As just a sampling, the Firm has played a significant role in the following CEA cases:
- In re Foreign Exchange Benchmark Rates Antitrust Litigation, No. 13-cv-07789 (S.D.N.Y.): The Firm serves as class and allocation counsel in an action alleging banks manipulated prices of FX transactions, including exchanged traded FX futures and options contracts ($2.3B in partial settlements to date).
- In re Natural Gas Commodity Litigation, No. 03-cv-06186 (S.D.N.Y.): The Firm served as co-lead counsel and obtained more than $100 million in settlements to resolve claims alleging that dozens of large energy companies manipulated the price of natural gas futures contracts traded on the New York Mercantile Exchange (NYMEX). The settlement was the second largest class action recovery under the Commodity Exchange Act in its 85-year history.
- In re Platinum and Palladium Antitrust Litigation, No. 14-cv-09391 (S.D.N.Y.): The Firm serves as co-lead counsel in a case alleging that dealers conspired to fix and manipulation the prices of these precious metals and exchange traded futures and options contracts based on these metals.
- In re Amaranth Natural Gas Commodities Litigation, No. 07-cv-6377 (S.D.N.Y.): The Firm served as class counsel and obtained a $77.1 million settlement to resolve allegations that several energy trading firms manipulated the prices of NYMEX natural gas futures contracts.
- In re Optiver Commodities Litigation, No. 08-cv-06842 (S.D.N.Y.): The Firm served as class counsel and obtained a $16.7 million settlement to resolve claims alleging that Optiver Holding BV manipulated oil and gasoline futures contracts over a 24-day period in 2007.
How We Can Help
If you would like Labaton Sucharow to provide a preliminary assessment of any impact the manipulation may have had on your Precious Metals investments, please provide us, in electronic form, all Precious Metals Futures and Options transactions you entered into between January 2009 and December 2015. Please contact the following attorneys for more information:
Christopher J. McDonald | (212) 907-0861 | firstname.lastname@example.org
Matthew J. Perez | (212) 907-0776 | email@example.com
 See https://www.justice.gov/opa/pr/former-precious-metals-trader-pleads-guilty-commodities-fraud-and-spoofing-conspiracy