Class Action Lawsuit: J.P. Morgan and HCBC Manipulated Silver Market

A class action lawsuit (SilverManipulationLawsuit-NIllinois-12-07-2010) has been filed against J.P. Morgan and HSBC saying the companies engaged in manipulation of the silver market through the use of silver exchange-traded funds. Here is what the lawsuit says happened; JP Morgan became the custodian and authorized participant of the largest known concentration of silver bars, the iShares Silver ETF, which holds in excess of 340 million troy ounces of silver about one third of the global supply of silver bullion. As a result, the company had knowledge of the whereabouts of the world’s known silver supply. Then around 2008, JP Morgan acquired Bear Stears which held a whole bunch of short positions in silver. This gave JP Morgan a motive to suppress prices. Then, says the suit, JP Morgan got together with HSBC another huge player in silver. HSBC became the custodian for SIVR ETF which means that it knew how much was held in that trust. The companies then conferred says the suit and decided to hold down the price of silver which made their shorts much more valuable for both companies. This scheme has apparently been confirmed by a precious metal trading veteran and the Commodities Futures Trading Commission announced violations happened.