If you're depressed and despondent over the price action in the metals, don't be. It's all simple, option expiry nonsense and it will get better next week. Besides, I have some happy news for you today...The Good Guys are fighting back.
You'll recall that late last year, the U.S. District Court in New York dismissed the civil suit for silver manipulation against JPMorgan. At the time, The Court granted the plaintiffs 30 days to re-file. Today, I'm happy to share with you that they, in fact, have re-filed and are quite optimistic about their case going forward.
First up, here's a link to the summary written by Turdville Attorney General CALawyer in the days immediately following the dismissal. You might want to review this again before going forward. http://www.tfmetalsreport.com/blog/4408/guest-post-summary-silver-civil-suit-dismissal-calawyer
Upon receipt of the filing yesterday, I once again sent it off to CALawyer for his opinion. Time was short so he was only able to reply with the email below. We are all in his debt for taking the time to review it. Again, CALawyer, THANK YOU!
This is my quick take. I read the Motion for Leave to Replead. It is very standard, and should be granted. Routine pleading, nice summary. The defense will oppose, claiming that even with all the new proposed facts, the new facts do not make a difference and thus, the Motion for Leave to Replead should be denied. It is a very low hurdle for Plaintiffs, and the Motion is almost certain to be granted, based on the new facts from the Proposed Second Amended Complaint. My read of the proposed new complaint is that this should be enough to make out a case. That may or may not be enough to get discovery launched, but the absolute last thing the defense wants is an army of Plaintiff attorney's scouring through the JPM documents. No TBTF bank wants that, ever. I hope, but I do not know, that the court will grant discovery on this based on the showing of alleged facts from the new complaint, though.
For example, look at this new allegation, at paragraph 137. I like this quote a lot:
"e. As a sophisticated and large market participant as well as a
market maker on the London market and clearing member of COMEX, JP Morgan
well knew each of the foregoing facts as they occurred. By selling in the small
COMEX market, JP Morgan knew that it received lesser sale prices because it had a greater depressant effects on prices. Thus, JP Morgan repeatedly and
uneconomically incurred additional transaction costs in order to sell at the lower
prices it caused on COMEX. JP Morgan thereby intentionally acted contrary to the
conduct of a hedger by repeatedly incurring greater transaction costs. It did so in
order to depress prices."
This allegation is tight, and makes out a compelling case, because it finally shows that JPM's behavior is illogical and hence, that leaves only the conclusion that it was manipulating prices. The distinction between the Comex and LBMA as far as price, volume, etc., is critical. Rhetorically, then, the obvious question that is asked, "Why would JPM hold a large short position on Comex to hedge when hedging on Comex cost more than on LBMA?, is then answered: "Because it wanted to manipulate prices despite the costs to do so because it made money from depressing prices, which ultimately means it was not hedging at all, since JPM would not hold a hedge that lost it money when it could hold the same hedge on LBMA without losing money."
I like the substantial allegations at paragraph 137 a lot. This could get real interesting if discovery is allowed.
That decision is the next real test, not the next motion to dismiss.
Thanks for letting me weigh in.
Anytime you need something my friend, just ask.
CALawyer, Esq. Attorney General de Turdville
OK, with that, the documents to review are below. The have been filed with the court and are fully public. At this point, we'll need to let the process run its course so no need to get carried away today. However, I felt that it was important for you to know that The Good Guys are continuing the fight on your behalf. Wish them well and Godspeed.
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