The Southern District of New York recently denied motions to dismiss filed by several banks that allegedly conspired to manipulate the price of gold and silver. Only defendant UBS was successful in convincing the court that the allegations against it failed to state a plausible antitrust claim.

Plaintiffs in these putative class actions are buyers of gold and silver futures and options. It is undisputed that the banks—other than UBS—participated in a process to set prices for these two precious commodities. Defendants contend that the prices were set using a legal and competitive auction process. Plaintiffs, however, allege that the defendant banks conspired to depress silver and gold prices on selected days; improperly shared confidential information in order to gain an unfair advantage over less knowledgeable market participants; and coordinated to maintain fixed bid-ask spreads to gain a pricing advantage.

In both cases, Judge Caproni found that plaintiffs had plausibly, “albeit barely” stated claims against the “fixing” defendants. The court recognized that parallel conduct alone was not enough to state a plausible antitrust claim, but gave credence to “plus factors” showing that the banks had a common motive to manipulate prices and foreknowledge of the prices that would be set. The evidence of plus factors included:

• Data showing the existence of unusual downward swings in gold and silver pricing despite the overall appreciation of gold and silver prices during the class period;

• Evidence that gold and silver fixing banks maintained parallel trading positions across the class period and quoted prices against their own interests;

• Data showing unusual volume spikes during the silver fixing call despite the fact that the U.S. silver markets were closed at the times of the volume spikes;

• Data showing an unexpected widening, rather than narrowing, of the bid-ask spread after publication of the fixed silver price;

• Data showing that trades placed during the silver fixing call—but before the prices was publicized—were twice as accurate in predicting the direction of the silver fix price as those placed before the fixing call.

The court dismissed the antitrust claims against UBS because UBS was not one of the banks that participated in the auction process for gold or silver prices. The court held that UBS’s role as market maker and FINMA’s fine of UBS for UBS’s misconduct in the FX and precious metals markets were not enough to plausibly allege that UBS violated antitrust laws because plaintiffs failed to identify any communications between UBS and the other banks suggestive of manipulative conduct or any other “plus factors.”

Before the motions to dismiss were decided, Deutsche Bank settled the silver case for $38 million and the gold case for an undisclosed amount. As part of its settlements, Deutsche Bank agreed to cooperate with plaintiffs going forward.