Bad bank boys talking to DOJ/CFTC regarding precious metals rigging

March 3, 2015 09:10 AM

Barclays has been providing information to an investigation into precious metals by the U.S. Department of Justice (DoJ), the bank said in its 2014 annual report on Tuesday, a week after a similar statement by HSBC.

The DoJ and the Commodity Futures Trading Commission are investigating at least 10 banks for possible rigging of precious metals markets, the Wall Street Journal reported last week, citing people close to the inquiries.

Tuesday's acknowledgment of its involvement in the investigation comes after HSBC said in its annual report on Feb. 23 that the DoJ had issued a request to HSBC Holdings in November seeking documents related to a criminal antitrust investigation it was conducting.

The latest investigation is a further distraction for a bank battling to cut costs and boost profit even as it prepares to settle allegations that its traders manipulated foreign exchange markets. Taking into account charges, provisions and restructuring costs, the bank suffered a 21% drop in full-year net profit, it said on Tuesday.

Regulatory scrutiny of precious metals trading and benchmarking has increased since the Libor rigging scandal exposed widespread manipulation of interest rates in the foreign exchange market.

Swiss regulator FINMA said in November that it found a clear attempt to manipulate precious metals benchmarks during its investigation of precious metals and foreign exchange trading at UBS.

"The behavior patterns in precious metals were somewhat similar to the behavior patterns in foreign exchange," FINMA director Mark Branson said in a conference call with journalists.

Germany's Bafin has been looking into how precious metals benchmarks are set, while Britain's Financial Conduct Authority said it was broadly looking at gold as part of an investigation into commodity benchmarks.

Meanwhile, multiple lawsuits have been filed in U.S. courts, alleging a conspiracy to manipulate precious metals prices.

The banks involved in producing global gold, silver, platinum and palladium benchmarks, known as the fixes, said last year they would no longer administer the standards.

A new silver benchmark is now administered by CME Group and Thomson Reuters, while the London Metal Exchange produces platinum and palladium benchmarks. The Intercontinental Exchange(ICE) will produce a new gold benchmark from March 20.

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