The U.S. Justice Department is investigating whether the world’s biggest banks manipulated prices of precious metals such as silver and gold, according to people with knowledge of the matter.
At least 10 banks, including Bank of Nova Scotia, Barclays Plc, JPMorgan Chase & Co., and Deutsche Bank AG are being probed by the Justice Department’s antitrust division, said one the people, who asked not to be named because the matter is confidential.
The metals investigation, which is in the early stages, broadens the Justice Department’s ongoing scrutiny of banks over manipulation of financial benchmarks. Prosecutors are conducting criminal investigations into the alleged rigging of interbank lending rates and currency markets.
HSBC Holdings Plc disclosed Monday that the Justice Department and U.S. commodities regulators have sought documents from the bank on precious-metals dealings. The London-based bank said it is cooperating in the probes. Spokesmen for the Justice Department and the Commodity Futures Trading Commission declined to comment.
The banks under investigation also include Credit Suisse Group AG, UBS Group AG, Goldman Sachs Group Inc., Societe Generale SA and Standard Bank Group Ltd., the person said. The Wall Street Journal reported late Monday that those banks were being investigated. The banks either declined to comment or didn’t immediately respond to requests for comment.
Three banks that settled currency-manipulation claims with U.S. regulators in November — JPMorgan, Citigroup Inc. and Bank of America Corp. — were required under terms of those agreements to review and identify “other trading activities that could raise similar market conduct issues.” Those reviews triggered scrutiny of precious metals trading, another person said.
The daily silver fixing, a price-setting ritual dating back a century, was overhauled last year with the help of the London Bullion Market Association after Deutsche Bank stopped taking part in the procedure. A similar telephone-based process for platinum and palladium was also replaced by an electronic, auction-based system as regulatory scrutiny increased over how market benchmarks are set, and the same will happen to gold fixings next month.
The Swiss Financial Market Supervisory Authority included precious metals trading in its currency-rigging probe, saying it found “serious misconduct” by UBS employees when announcing its settlement with the Zurich-based bank. Finma ordered UBS to repay 134 million Swiss francs ($141 million) in profit as part of the deal, which didn’t specify which desks accounted for the profit, and capped bonuses for traders in both areas.
The U.K. Financial Conduct Authority also looked into metals benchmarks, and visited member banks involved in the gold fixing last year as part of its review, a person with knowledge of the review said at the time. It found “no clear evidence” the London gold fixing had been manipulated, the FCA director of financial markets infrastructure and supervision told a parliamentary committee in July.
When it settled with five banks over currency-rigging claims in November, the FCA also said it’s reviewing precious metals as part of continuing supervisory work spurred by the foreign-exchange probe. Separately, the U.K. regulator fined Barclays in May after finding a trader at the London-based bank sought to influence the gold fix in 2012.
Chris Hamilton, a spokesman for the regulator, declined to comment on the status of the reviews.
The German financial regular found no signs of rigging in the gold market, Raimund Roeseler, head of banking supervision at Bafin, said in an interview with Handelsblatt in January.
HSBC, Goldman Sachs, Barclays and Deutsche Bank are among banks that have been sued by investors and jewelers in the U.S. over claims they conspired to manipulate precious metals prices for years.
HSBC also is under a five-year deferred prosecution agreement with the Justice Department from a previous money- laundering settlement. The agreement requires the bank to cooperate in other probes.