gata.org / By Alan Feuer / Tuesday, May 6, 2014
Banks Sued on Claims of Fixing Price of Gold
By Alan Feuer
The New York Times
Tuesday, May 6, 2014
http://dealbook.nytimes.com/2014/05/05/banks-sued-on-claims-of-fixing-pr…
Frustrated traders and offbeat activists –
– have complained for years in whispers and in online screeds that the price of gold has been subject to collusion. On Monday, these accusations of manipulation found a more august arena for expression: the federal courts.
At a 40-minute hearing, lawyers for more than 20 plaintiffs gathered in Federal District Court in Manhattan to coordinate their linked lawsuits against the five banks that make up what is known as the London gold fix. The suits, filed by hedge funds, private citizens, and public investors like the Alaska Electrical Pension Fund, contend that the banks have used their privileged positions as market makers to rig the price of gold to their benefit.
The lawsuits — the first of which was filed in March — question the integrity of the gold fix, which dates to 1919, when a handful of bankers began to meet in the wood-paneled offices of N. M. Rothschild & Sons in London. The purpose of the fix is to set a benchmark price for gold, which is subsequently used by dealers, central banks, and mining firms to buy and sell the precious metal and its various derivatives.