U.S. Precious-Metals Trade Probe Shifts From Antitrust to Fraud

  • Antitrust investigation of Credit Suisse, others, said closed
  • Fraud probe into metals-trading conduct continues, HSBC says

The U.S. Justice Department closed antitrust investigations of at least three banks into possible manipulation of precious-metals markets, according to people familiar with the matter, though its fraud investigation into the conduct continues.

The department’s antitrust division has closed investigations into Credit Suisse Group AG and Deutsche Bank AG over precious metals dealings, people familiar with the situation said. On Thursday, HSBC Holdings Plc said in a disclosure that antitrust prosecutors have closed their investigation into potential manipulation of precious metals prices by the bank, while a criminal fraud investigation by the department remained open.  

The Justice Department’s fraud section continues to probe activity in the precious metals market, people familiar with the matter said, though it wasn’t clear how many banks in all are still under investigation. Two of the people said the antitrust component of all of the precious metals probes had been closed.

A Justice Department spokesman declined to comment on the metals investigation. Representatives for the banks declined to comment or didn’t respond to messages seeking comment.

Benchmark Probes

Credit Suisse, Deutsche Bank and HSBC were among at least 10 banks that were under investigation by the Justice Department over alleged manipulation of metals prices, Bloomberg reported last year. The probe was among a string of inquiries by prosecutors into banks’ trading operations and possible rigging of financial benchmarks. The government has reached multibillion dollar settlements with lenders since the financial crisis over attempts to rig interest rates and currency prices.

An antitrust case requires prosecutors to prove that employees from competing institutions worked together to manipulate the market and fix prices. A fraud investigation could focus on whether bank employees cheated clients by misrepresenting prices or trades.

The U.S. move doesn’t rule out antitrust enforcement from other regulators after European Union and Swiss officials started probing precious-metals trading by banks. The EU and Swiss investigations are ongoing, according to spokesmen.

Last year, Switzerland’s competition regulator identified seven banks, including UBS Group AG, Deutsche Bank and HSBC, that were being investigated as part of the probe.

UBS won immunity from criminal fraud charges in the U.S. investigation, according to the company plea agreement last year with the Justice Department. UBS didn’t respond to a request for comment.

— With assistance by Keri Geiger, Gaspard Sebag, Hugo Miller, and Greg Farrell

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