US appeals court revives JPMorgan silver futures rigging lawsuits

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By Jonathan Stempel | NEW YORK

NEW YORK A U.S. appeals court on Wednesday
revived three private antitrust lawsuits accusing JPMorgan Chase
& Co of rigging a market for silver futures contracts
traded on COMEX.

The 2nd U.S. Circuit Court of Appeals in New York said a
lower court judge held hedge fund manager Daniel Shak and two
other traders to an excessively high legal standard when
deciding last June 29 to dismiss their complaints.

Shak, Mark Grumet and Thomas Wacker accused the largest U.S.
bank of having in late 2010 and early 2011 placed artificial
bids on the trading floor, harangued staff at metals market
COMEX to obtain prices it wanted, and made misrepresentations to
a committee that set settlement prices.

The traders said this forced them to post more capital to
support their positions in silver futures spreads, and
ultimately to liquidate them at heavy losses.

Shak is also known for playing high-stakes poker.

In Wednesday’s unsigned decision, a three-judge panel
rejected U.S. District Judge Paul Engelmayer’s finding that the
traders did not adequately show that JPMorgan made “uneconomic”
bids, or intended to rig the market.

The panel said Engelmayer demanded too much detail,
including specific transaction terms and the identities of
JPMorgan’s counterparties.

It also said Engelmayer engaged in “impermissible
fact-finding” by objecting to the plaintiffs’ use of the
12-month Silver Indicative Forward Mid Rates as a benchmark for
determining proper spread levels.

“We hold that plaintiffs adequately pleaded ‘willful
acquisition or maintenance of monopoly power’ to sustain an
antitrust claim,” the appeals court panel said.

JPMorgan spokesman Brian Marchiony declined to comment on
the ruling.

A lawyer for the traders, David Kovel, said: “We are happy
with the decision and look forward to having the claims heard.”

JPMorgan has prevailed in other silver litigation, including
in 2014 when the 2nd Circuit rejected class-action claims that
the New York-based bank intended to drive prices down.

The case is Wacker et al v. JPMorgan Chase & Co et al, 2nd
U.S. Circuit Court of Appeals, Nos. 16-2482, 16-2484, 16-2530.

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