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JPMorgan Hedges Silver for Clients, Masters Says on CNBC

JPMorgan Chase & Co. (JPM) mostly hedges silver for clients, and large speculative bets aren’t “part of our business model,” Blythe Masters, the bank’s head of global commodities, told CNBC.

Market participants “don’t see all our activity,” and bloggers have “a misunderstanding of the nature of our business,” Masters said today in an interview on CNBC. There is “an underlying client position” involved in hedge or forward trades, she said on CNBC.

A multiyear investigation into the possibility of unlawful acts in the silver market is continuing after regulators analyzed more than 100,000 documents, the U.S. Commodity Futures Trading Commission said in November.

Silver futures for May delivery rose 2.2 percent to close at $31.73 an ounce today. The price has dropped 36 percent from a 31-year high of $49.845 on April 25, 2011.

JPMorgan, based in New York, and HSBC Holdings Plc were sued in October 2010 by investors, including Peter Laskaris, who alleged that starting in March 2008, the banks manipulated silver in futures and options, partly by placing so-called spoof trading orders.

The banks reduced their collusive trading and their holdings in futures market after a government investigation began in 2008, according to the complaint by Laskaris.

Suits Pending

In September, investors said in a consolidated class-action complaint that they had signed a tolling agreement with HSBC and weren’t naming the bank as a defendant.

Tolling agreements are often used to stop statutes of limitation from running while the parties discuss settlement or dismissal of a claim.

The Laskaris case is one of about 45 similar suits pending in federal court in Manhattan, where they have been transferred for pretrial proceedings.

Jennifer Zuccarelli, a JPMorgan spokeswoman, declined to comment today on the pending cases.

JPMorgan, along with Barclays Plc, joined Goldman Sachs Group Inc. and Morgan Stanley as the most active in global commodity derivatives trading, a Greenwich Associates survey of corporate treasury officials shows.

To contact the reporter on this story: Patrick McKiernan in New York at pmckiernan@bloomberg.net;

To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net

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