The U.S. Commodity Futures Trading Commission closed a five-year investigation into the silver market, concluding there is no basis to allege manipulation.
The CFTC probe, which reviewed data on silver positions and related derivatives traded on exchanges operated by the CME Group Inc., didn’t produce evidence for lawyers to recommend an enforcement action, the agency said in a statement today.
“There is not a viable basis to bring an enforcement action with respect to any firm or its employees related to our investigation of silver markets,” the CFTC said.
The probe began in 2008 following public complaints to the CFTC about differences between prices in silver futures and other silver products. The agency, which that year took the rare step of confirming an open investigation, also reviewed allegations of manipulation in the market.
Enforcement lawyers spent 7,000 hours on the probe, reviewing trading data and documents and interviewing witnesses, the agency said.
“For me, there’s not been a more frustrating nor disappointing non-policy-related matter at the CFTC,” Bart Chilton, one of three Democratic commissioners, said today. At a 2010 CFTC meeting, Chilton, referring to publicly available reports on the silver market, said there have been “fraudulent efforts to persuade and deviously control that price.”
The agency reviewed the silver market in earlier reports, finding no evidence of manipulation. In a May 2008 report, the agency said that there was no evidence of manipulation in the market between 2005 and 2007.
“Although they have not found anything I don’t think it does anything to eliminate uncertainty whether prices that we see are true reflection of the market,” said Jeff Sica, who helps oversee more than $1 billion as the president of Sica Wealth Management in Morristown, New Jersey. “This winding down of the investigation may eliminate some doubt from people’s mind that there were minimal discrepancies in the time period they were looking at.”
The CFTC, in the preceding two decades, had received “numerous letters, e-mails and phone calls from silver investors” alleging that silver futures on the New York Mercantile Exchange had been manipulated downward, according to the report.
Silver prices, down 28 percent this year, are heading for the worst annual decline since 1984. Futures for December delivery settled today 1.4 percent higher at $21.886 an ounce on the Comex.