Sie sind auf Seite 1von 77

Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 1 of 35

2
gold derivative contracts, including COMEX gold futures contracts and options on futures
contracts. Defendants engaged in this conspiracy for the purposes of profiting from this
manipulation, both individually and collectively.
3. As alleged below, these practices included pre-fix and post-fix calls among
Defendants, other collusive conduct, and individual manipulative conduct by Defendants. E.g.,
74-83, infra.
4. This joint and individual conduct caused substantial harm to Plaintiff on June 28,
2012 (see 6 infra) and to Plaintiff and other persons holding or transacting in physical gold and
gold derivative contracts, including COMEX gold futures and options on many other days.
5. Because Defendants intentional conduct was carried out with the intent to
artificially fix prices of gold and gold derivatives, this conduct is per se unlawful.
I. PARTIES
A. Plaintiff
6. Plaintiff Derksen is a resident of Oregon. During the Class Period, Plaintiff
purchased and sold COMEX gold derivatives including options on futures contracts. On June
28, 2012 in particular, Plaintiff held a long position in ten August 2012 gold call options that was
negatively affected by the downward manipulation by Defendant Barclays Plc of the London Fix
and physical gold prices. See 68-73, infra. As a general matter, Plaintiff tended to hold long
COMEX gold call positions during the Class Period. Because of Defendants manipulation,
Plaintiff transacted at artificial prices and/or in an artificial market.
B. Defendants
7. Defendant Bank of Nova Scotia (BNS), doing business as Scotiabank
(Scotiabank) is a Canadian public company with headquarters in Toronto, Ontario, Canada.
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 2 of 35
3
Defendant Scotiabank is licensed by the New York Department of Financial Services with a
registered address at One Liberty Plaza, 22nd-26th Floors, New York, NY 10006. Defendant,
through its broker-dealer affiliate The Bank of Nova Scotia, actively traded COMEX gold
futures and options contracts during the Class Period.
8. Defendant Barclays Bank plc (Barclays) is a British public limited company
with headquarters at 1 Churchill Place, London E14 5HP, England. Barclays is licensed by the
New York Department of Financial Services with a registered address at 745 Seventh Avenue,
New York, NY 10019, and a foreign representative office at One MetLife Plaza, 27-01 Queens
Plaza North, Long Island City, New York 11101. Defendant, through its broker-dealer affiliate,
Barclays Capital Inc., actively traded COMEX gold futures and options contracts during the
Class Period.
9. Defendant Deutsche Bank AG (DB) is a German financial services company
headquartered in Frankfurt, Germany. DB is licensed by the New York Department of Financial
Services with a registered address at 60 Wall Street, New York, NY 10005. Defendant, through
its broker-dealer affiliate, Deutsche Bank Securities Inc., actively traded COMEX gold futures
and options contracts during the Class Period.
10. Defendant HSBC Holdings plc (HSBC) is a British public limited company
headquartered in London at 8 Canada Square, London E14 5HQ, England. HSBC has numerous
subsidiaries in the United States, including HSBC Bank U.S.A., N.A., the principal subsidiary of
HSBC U.S.A. Inc., an indirect, wholly-owned subsidiary of HSBC North America Holdings Inc.
HSBC, through its broker-dealer affiliate, HSBC Securities (USA) Inc., actively traded COMEX
gold futures contracts during the Class Period. Defendant HSBC, through its broker-dealer
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 3 of 35
4
affiliate, HSBC Securities (USA) Inc., actively traded COMEX gold futures and options
contracts during the Class Period.
11. Defendant Socit Gnrale (SocGen) is a public banking and financial services
company headquartered in Paris, France. Defendant SocGen is licensed by the New York
Department of Financial Services with a registered address at 1221 Avenue of the Americas,
New York, NY 10020. Defendant SocGen, through its broker-dealer affiliate, held by virtue of a
joint venture with Credit Agricole CIB, NewEdge USA, LLC, actively traded COMEX gold
futures and options contracts during the Class Period.
12. During the Class Period, Defendants BNS, Barclays, DB, HSBC, and SocGen
owned and were fixing members of the London Fix, were gold dealers, and bear responsibility
for the alleged acts of their employees and the conduct and planning of the London Fix.
II. CO-CONSPIRATORS
13. In addition, various other entities and individuals unknown to Plaintiff at this time
participated as co-conspirators in the acts complained of, and performed acts and made
statements that aided and abetted and were in furtherance of, the unlawful conduct alleged
herein.
14. Each of these unknown parties acted as the agent or joint venture of or for the
named Defendants with respect to the acts, violations, and common course of conduct alleged
herein.
15. Whenever in this Complaint reference is made to any act, deed, or transaction of
any corporation, the allegation means that the corporation engaged in the act, deed, or transaction
by and/or through its officers, directors, agents, employees, or representatives while they were
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 4 of 35
5
actively engaged in the management, direction, control, or transaction of the corporations
business or affairs.
III. JURISDICTION AND VENUE
16. Plaintiff brings this action under Section 22 of the Commodity Exchange Act, 7
U.S.C. 25, to recover actual damages suffered as a result from Defendants violations of the
Commodity Exchange Act and CFTC Rule 180.1(a).
17. Plaintiff also brings this action under Section 4 of the Clayton Act, 15 U.S.C.
15, to recover treble damages and costs of suit, including reasonable attorneys fees, against
Defendants for the injuries that Plaintiff and the other Class members have suffered from
Defendants violations of Section 1 of the Sherman Act (15 U.S.C. 1).
18. This Court has subject matter jurisdiction over this action pursuant to Sections 4
and 16 of the Clayton Act (15 U.S.C. 15(a) and 26) and pursuant to 28 U.S.C. 1331 and
1337(a). The Court also has jurisdiction pursuant to 28 U.S.C. 1332(d) and the Class Action
Fairness Act of 2005 (CAFA), 28 U.S.C. 1711, et seq., which vests original jurisdiction in
the district courts of the United States for any multi-state class action where the aggregate
amount in controversy exceeds five million dollars and where the citizenship of any member of
the class of is different from that of any Defendant. The five million dollar amount-in-
controversy and diverse-citizenship requirements of CAFA are satisfied in this case.
19. Venue is proper in this District pursuant to 15 U.S.C. 15(a) and 22 and 28
U.S.C 1391(b), (c) and (d) because during the Class Period, all the Defendants resided,
transacted business, were found, or had agents in this District; a substantial part of the events or
omissions giving rise to these claims occurred in this District; and a substantial portion of the
affected interstate trade and commerce discussed herein has been carried out in this District.
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 5 of 35
6
This Court has personal jurisdiction over each Defendant, because each Defendant transacted
business throughout the United States, including in this District; and dealt with Class members
throughout the United States, including Class members residing or located in this District; had
substantial contacts with the United States, including in this District; and/or committed overt acts
in furtherance of their illegal scheme and conspiracy in the United States. In addition, the
conspiracy was directed at, and had the intended effect of, causing injury to persons residing in,
located in, or doing business throughout the United States, including in this District.
20. Venue is proper in this District pursuant to Section 22 of the Commodity
Exchange Act, 7 U.S.C. 25, because one or more Defendants resides or is found in the District.
Defendants unlawful acts allegedly manipulated the prices of COMEX gold futures and options
contracts that were traded on COMEX, a designated contract market located in this district at
One North End Avenue, New York, New York.
IV. INTERSTATE COMMERCE
21. The activities of Defendants and their Co-Conspirators were within the flow of,
were intended to, and did have a substantial effect on the foreign and interstate commerce of the
United States.
22. Defendants made use of the means and instrumentalities of transportation or
communication in, or the instrumentalities of, interstate commerce, or the mail in connection
with the unlawful acts detailed in this Complaint.
23. Defendants each engage in substantial business activities in the United States that
affect billions of dollars of commerce in gold and gold derivatives.
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 6 of 35
7
V. CLASS ACTION ALLEGATIONS
24. Plaintiff, on behalf of himself and all similarly situated putative Class members,
seek damages against Defendants based on allegations contained herein.
25. Plaintiff brings this action on behalf of himself and, under Federal Rule of Civil
Procedure 23(a) and (b)(3), as a representative of a Class defined as follows:
All persons or entities in the United States and its territories that,
from January 1, 2004 to the present, held or transacted in physical
gold, or gold derivatives that settled or were marked-to-market
based on the London Fix, or held or transacted in COMEX gold
futures or options contracts. Excluded from the Class are
Defendants, their co-conspirators, and their officers, directors,
management, employees, subsidiaries, or affiliates, and all federal
governmental entities.
26. Numerosity. Members of the Class are so numerous that joinder is impracticable.
Plaintiff does not and cannot not know the exact size of the Class at present, but believes that
there are hundreds of Class members geographically dispersed throughout the United States.
27. Typicality. Plaintiffs claims are typical of the claims of the members of the Class.
Plaintiff and all members of the Class were damaged by the same wrongful conduct of
Defendants.
28. Plaintiff will fairly and adequately protect and represent the interests of the Class.
The interests of Plaintiff are coincident with, and not antagonistic to, those of the Class.
Accordingly, by proving its own claims, Plaintiff will prove other Class members claims as
well.
29. Adequacy of Representation. Plaintiff is represented by counsel experienced and
competent in the prosecution of class action antitrust litigation. Plaintiff and its counsel have the
necessary financial resources to adequately and vigorously litigate this class action. Furthermore,
Plaintiff can and will fairly and adequately represent the interests of the Class and has no
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 7 of 35
8
interests that are adverse to, at conflict with, or antagonistic to the interests of the Class. Plaintiff
understands and appreciates his duties to the Class under Rule 23 of the Federal Rules of Civil
Procedure, is determined to diligently discharge those duties, and is committed to vigorously
protecting the rights of absent Class members.
30. Predominance. Questions of law and fact common to the members of the Class
predominate over questions that may affect only individual Class members because Defendants
have acted on grounds generally applicable to the entire Class, thereby making overcharge
damages with respect to the Class as a whole appropriate. Such generally applicable conduct is
inherent in Defendants wrongful conduct.
31. Commonality. There are questions of law and fact common to the Class. Such
questions relate to the existence of the conspiracy alleged, and the type and common pattern of
injury sustained as a result thereof, including, but not limited to:
a. whether Defendants and their co-conspirators conspired among themselves and/or
with others to manipulate prices of gold and gold derivative contracts;
b. whether Defendants and their co-conspirators manipulated prices of gold
derivative contracts;
c. the duration of the conspiracy alleged in this Complaint and the nature and
character of the acts performed by defendants and their co-conspirators in furtherance of
the conspiracy;
d. whether the alleged conspiracy violated Section 1 of the Sherman Act;
f. whether the conduct of defendants and their co-conspirators, as alleged in this
Complaint, caused injury to the business and property of Plaintiff and other members of
the Class;
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 8 of 35
9
g. the appropriate measure of damages sustained by Plaintiff and other members of
the Class.
32. Superiority. Class action treatment is a superior method for the fair and efficient
adjudication of the alleged controversy. Such treatment will permit a large number of similarly
situated, geographically dispersed persons or entities to prosecute their common claims in a
single forum simultaneously, efficiently, and without the unnecessary duplication of evidence,
effort, or expense that numerous individual actions would engender. The benefits of proceeding
through the class mechanism, including providing injured persons or entities a method for
obtaining redress on claims that could not practicably be pursued individually, substantially
outweigh potential difficulties in management of this class action.
33. Plaintiff knows of no special difficulty to be encountered in the maintenance of
this action that would preclude its maintenance as a class action.
VI. FACTUAL ALLEGATIONS
A. The London Fix and the Market for Gold
34. Gold is a commodity as defined by the Commodity Exchange Act, 7 U.S.C.
1(a)(4). Gold also serves as the commodity underlying derivative contracts, including gold
futures and gold options traded on COMEX, a designated contract market located in New York,
NY under Section 22 of the Commodity Exchange Act, 7 U.S.C. 25.
35. Gold is the most popular precious metal for investors worldwide.
2
The World
Gold Council estimates that the investable gold market, as of 2010, was approximately $2.4
trillion.
3
2
http://www.investopedia.com/features/industryhandbook/metals.asp
3
http://www.exchangetradedgold.com/media/ETG/file/liquidity_in_the_global_gold_market.pdf
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 9 of 35
10
36. The price for gold worldwide is driven, in large part, by a process called the
London Fix.
37. The London Fix was created to set a daily benchmark price for Good Delivery
gold -- physical gold bars complying with a set of rules issued by the London Bullion Market
Association (LBMA), an international trade association that represents the London market for
gold bullion.
4
38. During the Class Period, the London Fix involved five representatives
Defendants BNS, Barclays, DB,
5
HSBC, and SocGen on a teleconference.
39. These banks join a twice-daily teleconference commencing at 10:30 a.m. London
time and 3:00 p.m. London time.
40. Although only the banks participate on the calls, they represent their market
participant clients on the call. These participants include gold producers (miners, refiners), gold
consumers (jewelers, manufacturers), investors, speculators, and sovereign states, among others.
41. At the beginning of the teleconference, one bank, designated as the Chair,
proposes a starting price for the day, usually closely tracking the existing spot price for gold.
4
The LBMA includes the majority of the gold-holding central banks, private sector investors,
mining companies, producers, refiners and fabricators.
5
DB has announced its withdrawal from the gold fixing process, but was remaining as a
participating member until a buyer for its seat is found. See Maria Kolesnikova and Nicholas
Larkin, Deutsche Bank Withdraws From Gold Fixing in Commodities Cuts, Bloomberg.com,
Jan. 17, 2014, available at: http://www.bloomberg.com/news/2014-01-17/deutsche-bank-
withdraws-from-gold-fixing-in-commodities-cutback.html . Reports indicated that South
Africas Standard Bank, in conjunction with Chinese bank ICBC, was likely to make a bid to
acquire the seat. See Clara Denina and Jan Harvey, Standard Bank in prime position for
Deutsches gold fix seat: sources, Reuters, Feb. 18, 2014, available at:
http://www.reuters.com/article/2014/02/18/us-gold-fix-frontrunner-idUSBREA1H0X120140218
Ultimately, however, on April 29, 2014, Reuters reported that Deutsche Bank had given notice
that it would cease to be part of the price-setting process as of May 13 [2014] without having
found a buyer for its seat. See Update 1-Deutsche Bank resigns gold, silver fix seat with no
buyer, Reuters (Apr. 29, 2014), available at: http://uk.reuters.com/article/2014/04/29/gold-fix-
deutsche-bank-idUKL6N0NL5LA20140429
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 10 of 35
11
Each of the remaining members declares whether they are a net buyer or net seller at the
proposed price. If there are no buyers or sellers at a given price, the chair will move the price
until there are both buyers and sellers.
42. At that point, the auction moves to a secondary phase, where buyers and sellers
identify the quantity of gold they would be buying or selling at the specified price. These
quantities are specified in increments of five bars.
6
The Chair will increase the price if the net
purchases of gold would be 50 bars greater than the net sales at the price, and reduce it if the net
sales would be 50 bars greater than the net purchases.
43. This process continues for an indefinite period of time, usually in the range of 5-
15 minutes, until the quantities are balanced to within 50 bars, each bar being specified as
between 350 and 430 troy ounces
7
of gold with a minimum fineness of 995.0 parts per thousand
fine gold.
8
44. Once the difference is 50 bars or less, the Chair may declare the price fixed and
the banks will split the difference pro rata among themselves.
9
This pro rata arrangement is
purely between the banks and will not affect their underlying customer orders.
10
45. Once the Chair declares the price to be fixed, the fixing price is published
immediately by various news agencies.
11
6
https://www.goldfixing.com/how-is-the-price-fixed/
7
One troy ounce is exactly 31.1034768 grams. Each COMEX futures contract is a contract for
future delivery of 100 troy ounces with a minimum fineness of 995 parts per thousand fine gold.
8
http://www.lbma.org.uk/pages/index.cfm?page_id=27
9
https://www.goldfixing.com/how-is-the-price-fixed/
10
Id.
11
London Bullion Market Association and The London Platinum and Palladium Market, A
Guide to the London Precious Metals Markets at 15 (Aug. 2008), available at:
http://www.lppm.com/otcguide.pdf
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 11 of 35
12
46. London Fix members trade other gold-related instruments during the London Fix
teleconference. In this way, the members and/or their affiliates can leverage their critical
foreknowledge - that the price is virtually certain to move in accordance with the fixing - to trade
derivatives to the disadvantage of Plaintiff and the Class. Similarly, like in the instance of
LIBOR-rigging, Defendants knowledge impelled them to adjust and coordinate their statements
and actions during the London Fix based on how their own derivatives positions would benefit or
suffer from the outcome of the fixing.
B. Gold Derivatives COMEX Futures and Options.
47. Derivatives are financial instruments, the value of which is tied to the underlying
net worth, performance or value of another asset. Derivative contracts include, among other
things, contracts for sale of a commodity for future delivery (typically referred to as futures
contracts) and options on such contracts. Both futures contracts and options are regulated by the
Commodity Futures Trading Commission (CFTC).
12
48. Futures contracts are required to be traded on exchanges. These exchanges are
known as designated contract markets.
13
49. COMEX (Commodity Exchange, Inc.) is a designated contract market located in
New York, New York. COMEX has been owned and operated by the CME Group since 2008.
14
COMEX offers a platform for trading of gold futures and options contracts, as well as contracts
in other metals such as silver and copper.
15
12
See 7 U.S.C. 2(a)(1)(A).
13
See 7 U.S.C. 7.
14
See http://investor.cmegroup.com/investor-relations/releasedetail.cfm?ReleaseID=329722
15
http://www.cmegroup.com/product-codes-listing/comex-market.html
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 12 of 35
13
50. Among these gold derivative contracts, COMEX offers standardized gold futures
contracts with delivery dates commencing with the next calendar month, and potentially
extending as far as 72 sequential months into the future, depending upon the month in which the
contract was executed. The number of gold futures contracts trading at any given time varies.
Trading is conducted for delivery during the current calendar month; the next two calendar
months; each February, April, August, and October within a 23-month period; and any June and
December falling within a 72 month period beginning with the current month. The two most
immediate expirations are called front months. Front month contracts are the most actively
traded gold futures.
51. A gold futures contract is an agreement to buy or sell gold in the amount specified
as a term of the contract. The COMEX specifies the terms of trading, including the trading units,
price quotation, trading hours, trading months, minimum and maximum price fluctuations and
margin requirements.
16
The contract size for gold futures is 100 troy ounces, with minimum
quality specifications of 995 fineness. The minimum price fluctuation for gold futures
contracts is $0.10 per troy ounce. Prices of gold futures are quoted in dollars and cents per troy
ounce.
52. Trades of COMEX gold futures contracts have two sides. The long side
represents the buyer of a contract who is obligated to pay for the gold and take delivery. The
short side represents the seller of a contract who is obligated to receive payment for the gold
and make delivery. If a market participant holds its position to the end of the settlement period
for a gold futures contract, the market participant is obligated to go to delivery. Once the
16
See, e.g.,
http://www.cmegroup.com/trading/metals/precious/gold_contract_specifications.html
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 13 of 35
14
settlement date is reached, the futures contract for a particular month becomes a bilateral contract
to pay for and deliver physical gold pursuant to the individual contract specifications.
53. The gold futures contracts for the current delivery month terminate trading on the
third last business day of the delivery month. On this day, physical delivery of the gold must
occur, with the long futures holders receiving the gold at specified locations, and those on the
short side delivering the gold to those locations.
54. No trades in gold futures deliverable in the current delivery month are made after
the third last business day of that month. Any contracts remaining open after the last trade date
are either: (a) Settled by delivery which shall take place on any business day beginning on the
first business day of the delivery month or any subsequent business day of the delivery month,
but no later than the last business day of the delivery month; or (b) Liquidated by means of a
bona fide Exchange for Related Position (EFRP) pursuant to CME Rule 538.
17
55. If delivery occurs, the entity delivering the gold must provide the gold from a
CME-approved producer bearing the one or more of the CMEs approved brand marks, assayed
by approved assayer, and delivered with a licensed depository within a 150-mile radius of the
City of New York.
56. Gold futures prices for active months not going to delivery settle on a daily basis
(and at final settlement) based on exchange activity between 13:29:00 and 13:30:00 Eastern
Time (ET). The active month is the nearest base contract month that is not the current delivery
17
See, e.g., CME Rulebook Chapter 113, Gold Futures, available at:
http://www.cmegroup.com/rulebook/NYMEX/1a/113.pdf (An EFRP is permitted in an expired
futures contract until 12:00 p.m. on the business day following termination of trading in the
expired futures contract. An EFRP which establishes a futures position for either the buyer or
the seller in an expired futures contract shall not be permitted following the termination of
trading of an expired futures contract.)
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 14 of 35
15
month. The base months for gold futures are February, April, June, August and December. The
COMEX determines pricing according to the following schedule.
a. Tier 1: If a trade(s) occurs on Globex (the electronic platform) between
13:29:00 and 13:30:00 ET, then the contract month settles to the volume-
weighted average price (VWAP), rounded to the nearest tradable tick.
b. Tier 2: In the absence of outright trades during the settlement window, the
active month settles to the best bid or ask in the expiring contract at market
close that is nearest to the last traded price.
c. Tier 3: If there is no bid or ask in the expiring contract at that time, then the
settlement price is implied from the bid/ask in the active spread at the close of
the market.
18
57. Few COMEX futures contracts result in actual delivery of the underlying
commodities. Traders generally use futures contracts as a hedging mechanism or to speculate on
movements in the price of a commodity and enter offsetting trades prior to their expiration. For
example, a purchaser of a gold futures contract can cancel or offset his future obligation to the
contract market/exchange clearing house to take delivery of gold by selling an offsetting futures
contract. The difference between the initial purchase or sale price and the price of the offsetting
transaction represents the realized profit or loss.
58. Gold options on futures contracts are also traded on COMEX.
19
There are two
types of options calls and puts. A call option gives the holder of the gold option the opportunity
to purchase the underlying futures contract at a certain price, known as the strike price, until the
18
See http://www.cmegroup.com/trading/metals/files/daily-settlement-procedure-gold-
futures.pdf
19
See http://www.cmegroup.com/trading/metals/precious/gold_contractSpecs_options.html
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 15 of 35
16
date that the option expires. Accordingly, if the price of the futures contracts trading on
COMEX exceeds the strike price, a call will typically be exercised as in the money. A put
option guarantees the holder the opportunity to sell an underlying futures contract at the strike
price until the date that the option expires. A put option is purchased when the party expects
prices in the underlying contract to fall (analogous to a short position on a futures contract); a
call option is purchased when the purchaser expects prices in the underlying contract to rise
(analogous to a long position on a futures contract).
C. The Relationship Between the London Fix and the Price of Gold Derivatives.
59. Futures trading allows a trader to hedge against a change in the price of the
underlying commodity in the future, or to speculate on future prices of such commodity with the
intention of making a profit.
60. Futures contracts rarely result in physical delivery. As the United States Court of
Appeals for the Eight Circuit noted in Cargill, Inc. v. Hardin, 452 F.2d 1154, 1172-73 (8th Cir.
1971):
While the obligation to make or take delivery is a bona fide feature
of the futures contract, in reality the futures market is not an
alternative spot market for the commodity itself, and indeed the
functions performed by the futures market would probably be
severely hampered if it were turned into an alternative spot market.
Most parties who engage in futures transactions are in no position
to either make or take delivery, and if they were required to always
make preparations to fulfill their obligations to make or take
delivery, the number of persons who could effectively participate
in the futures market would be substantially restricted, thus
reducing the liquidity and volume of that market. The main
economic functions performed by the futures market are the
stabilization of commodity prices, the provision of reliable pricing
information, and the insurance against loss from price fluctuation.
The functions can be fulfilled only if both longs and shorts can be
assured that they can offset their contracts at non-manipulated
prices.
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 16 of 35
17
61. Nonetheless, the spot or physical market prices are intimately related to the prices
on the futures markets. This is because the futures price and the spot market prices converge
at the time of delivery. The convergence is the result of the futures contract converting at the
point of delivery to physical gold at a licensed depository near the City of New York. Thus, for
those taking delivery on a gold futures contract (i.e., the long contracts of the nearby delivery
month), the price at which they can sell the gold that they receive will be the spot (physical)
price of gold.
62. The futures price is thus the markets consensus of the expected spot price for the
underlying physical commodity at a specified future date. Because the futures price is nothing
more than an expectation of the future spot price, both futures and physical prices must be and
are, in fact, directly correlated.
63. For example, if the futures price in a contract negotiated today for delivery next
month starts to rise, this indicates that the market believes spot prices will rise next month. The
rise in the future price for delivery next month will cause a reaction today among producers and
consumers of the commodity.
64. The following chart demonstrates how the marked strong influence that the
London Fix has as a key daily event in the development of the prices of physical gold would
equally affect COMEX gold futures prices. In fact, from January 2010 until December 2013, the
end of day physical gold prices and the end of day prices of the COMEX gold futures contract
had a correlation coefficient of approximately 97%, with average price spreads of only 0.15% (or
0.0015) and average return spreads of 0.22%(or 0.0022).
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 17 of 35
18
65. Even the correlation of the 1-minute average intraday returns of physical gold and
COMEX gold futures was very strong at approximately 78%. The following chart of average
intraday gold price shows the same strong relationship between the physical gold and the
COMEX gold futures markets.
800
1000
1200
1400
1600
1800
2000
Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13
P
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

U
S
D
Gold Spot and Futures Prices: 2010-2013
Spot Futures
998.6
998.8
999
999.2
999.4
999.6
999.8
1000
1000.2
1000.4
1000.6
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Gold Prices: Jan 2010 - Dec 2013
Futures
Physical
AM Fixing
PM Fixing
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 18 of 35
19
D. Defendants Unlawful Conduct
66. Plaintiff alleges that from approximately January 1, 2004 to the present,
Defendants manipulate the prices of gold and gold derivatives contracts on their own and
combined, conspired, and agreed with one another and unnamed co-conspirators to manipulate
the prices of gold and gold derivatives contracts.
67. This agreement was intended to permit each Defendant individually and all
Defendants collectively to reap profits from their foreknowledge of price movements in the gold
market.
1. Barclays Fined 26 Million for Trader Manipulation of London Fix
68. On May 23, 2014 the UKs Financial Conduct Authority (FCA) fined Barclays
the equivalent of $44 million for failing to manage conflicts between itself and customers
relating to the London Fix from 2004-2013.
69. The FCA also fined a Barclays trader, Daniel James Plunkett, 95,000 for
influencing the June 28, 2012, 3pm London Fix in order to avoid paying a Barclays customer
$3.9 million on a digital option (an option with an all-or-nothing style payoff) expiring on June
28, 2012 that would force the bank to pay the client if the fixing price was above $1,558.96. As
a direct result of the traders manipulative efforts, the 3pm London Fix was set at $1,558.50, a
mere $.46 below the options strike price.
70. As illustrated in the chart below, the Barclays traders manipulation of the
London Fix price had a clear impact on the spot market prices of gold.
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 19 of 35
20
71. The above chart shows a sharp decrease in the price of physical gold immediately
following the start of the fixing call. This is indicative of Barclays overstating the amount of sell
orders on its book in order to force the fixing price downwards. As this information was leaked
into the market, a large suppression in gold prices is observed. Following this initial
suppression, there was a temporary recovery in the market before another sharp decline in prices
towards the options strike price. This is consistent with Barclays making a concerted effort to
ensure that the fixing price was set below the options strike price.
72. The fixing price does not correspond precisely to the market level at the end of
the fixing call because the auction is based on the members order books and not on actual
market transactions. As such, there is a lag in market prices until the fixing information is leaked
(during the call) or released (after the call) to the market.
73. On June 28, 2012, Plaintiff held a long call option position that was negatively
impacted by Barclays manipulative conduct.
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 20 of 35
21
2. Defendants Illicitly Shared Information With One Another Prior to the
London Fix and Entered Spoof Orders to Move Prices In Their Favor
74. Based upon Plaintiffs Counsels factual, economic and other investigation,
Plaintiff has good grounds to believe and does allege as follows.
75. Between at least 2004 and at least late 2013, traders employed by Defendants and
involved in the London Fix typically or frequently had, during the minutes before the London
Fix commenced, joint communications with one another via various means including one-on-one
private chat rooms.
76. During such pre-Fix communications, the Defendant banks repeatedly shared
information with one another about significant orders or intentions of one anothers customers.
77. These communications frequently entailed one Defendant divulging to one or
more other Defendants specific large amounts that were to be purchased or sold by such
Defendants customer during the London Fix. Such specific disclosures ranged from 10,000 to
100,000 ounces to be purchased or sold by a given Defendants customer during the London Fix.
78. In addition to divulging specific facts concerning customer orders, such pre-Fix
communications frequently included discussions of, or advice as to, what steps the Defendants
should take during the London Fix so as to mutually profit themselves from the order flow.
These discussions included simple advice, such as do not get in the way of the orders that a
Defendant would be submitting. Such discussions also included active steps that could be taken
by Defendants to profit from the order flow.
79. Based on these pre-call communications, Defendants collusively adjusted and
coordinated their conduct during the London Fix in order to profit and/or avoid losses for
themselves at the expense of the market, including their clients.
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 21 of 35
22
80. Separate and apart from this aspect of Defendants pre-Fix collusion, Defendants
also, collectively or individually, or working with large customers of a Defendant, engaged in
communications prior to and during the London Fix that were intended to move and manipulate
gold prices in order to profit one or more of Defendants or their customers.
81. Such communications included placing, just prior to the London Fix, during the
London Fix, at the London Fix, and/or after the London Fix, large orders for COMEX gold
futures contracts on the Globex trading platform for which there was no intention of execution.
82. These spoof orders were designed to move the market prices just prior to the
Fix, during the Gold Fix, at the Fix, and/or after the Fix, so as to profit one or more of
Defendants or their customers.
83. Many of these large spoof orders amounted to front-running other orders to be
executed during the London Fix, or the London Fix itself, and were specifically intended to
manipulate prices registered during the London Fix and/or or the outcome of the London Fix
itself.
3. Numerous Trading Days Exhibit Evidence of Manipulation
84. Anomalous price movements during the fixing window that are highly suggestive
of manipulation - like those on June 28, 2012 - can be witnessed on numerous days, where prices
near the 3 p.m. London Fix spike, either upward or downward, and then retreat in the opposite
direction as the price is fixed. Five trading days are analyzed below as illustrative of the
overall trend during the Class Period. On February 1, 2013, there was a dramatic drop in price
from nearly $1678 to below $1665, contemporaneous with the beginning of the London Fix.
The price began recovering during the London Fix and continued afterwards. This movement
around the fixing window is highly anomalous and suggestive of manipulation because it tends
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 22 of 35
23
to show that the market ultimately discounted to some degree the pricing information that
occurred during the London Fix.
85. Then again, on February 3, 2012, the price for gold was approximately $1750
minutes before the beginning of the PM London Fix call. The price then fell dramatically to
$1738 as the call opened. This drop anticipated the decline that occurred during the call to below
$1735. Minutes after the call ended, prices recovered strongly, reaching a post Fix high of
approximately $1743. This movement around the fixing window (steep drop just before the call,
continued during the call, steeply recovering afterwards) is highly anomalous and suggestive of
manipulation because it tends to show that the market ultimately discounted to some degree the
pricing information that occurred during the London Fix.
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 23 of 35
24
86. On January 4, 2012, there was anomalous price movement before the beginning
of the PM Fix call, this time in an upward direction. The gold price rose from below $1599 to
more than $1614 within the half hour before the beginning of the call, only to surrender most of
these gains within the half hour following the call. This movement around the fixing window
(steep rise just before the call, with a clear reversal that begins at the very beginning of the call)
is highly anomalous and suggestive of manipulation because it tends to show that the market
ultimately discounted to some degree the pricing information that occurred during the London
Fix.
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 24 of 35
25
87. On September 4, 2012, the gold price sat below $1690 just 15 minutes before the
beginning of the London Fix. At nearly the precise moment the PM Fix call began, prices
steeply increased to just shy of $1699, only to begin to fall back to below $1691 at the end of the
London Fix. This movement around the fixing window (steep rise as the call begins, sustained
through the call, and retrenchment to pre-call levels beginning at the very minute the call ends) is
highly anomalous and suggestive of manipulation because it tends to show that the market
ultimately discounted to some degree the pricing information that occurred during the London
Fix.
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 25 of 35
26
88. On May 21, 2013, the gold price declined significantly in the 25 minutes prior to
the call only to recovery briskly once the call ended. This movement around the fixing window
is highly anomalous and suggestive of manipulation because it tends to show that the market
ultimately discounted to some degree the pricing information that occurred during the Fix.
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 26 of 35
27
89. If the five previous examples of anomalous volatility around the London Fix mere
statistical outliers and not evidence of manipulation, then it would be expected that this volatility
would disappear when looking at an average of all the trading days during the class period. To
the contrary, the price manipulation actually becomes clearer when viewed over the past fifteen
years. The chart below shows the change in physical gold prices if each trading day for the
period from 1998 through 2013 were averaged together. The dramatic changes in price followed
by swift reversals at the time of the AM and PM London Fix in this chart demonstrate that the
phenomenon is not coincidental statistical noise occurring on only a few cherry-picked dates, but
rather is a clear trend that cannot be explained by chance. Appendix A contains charts breaking
down the intra-day averages by one-year periods.
90. The table below illustrates that price moves of statistically anomalous size during
the London Fix occurred with great frequency. If these London Fix price moves were the result
of natural market forces, it would be expected that those price moves would be either maintained
or reversed with the same statistical regularity as any other price move observed during the
999.6
999.7
999.8
999.9
1000.0
1000.1
1000.2
1000.3
1000.4
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Physical Gold Price: Jan 1998 - Dec 2013
AM Fixing
PM Fixing
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 27 of 35
28
trading day. If it were manipulation that caused the London Fix price moves, these moves would
be reversed with greater frequency than expected because the manipulators must reverse their
trade in order to book a profit and because legitimate market factors would ultimately cause
some degree of discounting of the pricing information from the London Fix. Sure enough,
statistically anomalous price reversals after the London Fix, of the price changes during the
London Fix, occurred with enough regularity to indicate manipulative activity.
Frequency of Anomalous Price Moves During London Fix Calls
% of Fix Calls Accompanied by Price
Moves of Anomalous Size
% of Fix Calls Accompanied by
Anomalous Price Moves that were
Subsequently Reversed
2010 17%-23% 7%-10%
2011 16%-25% 5%-12%
2012 18%-25% 8%-12%
2013 20%-29% 12%-17%
2010-2013 18%-25% 8%-13%
91. The following chart depicts the increasing extent to which anomalous price moves
at the time of the London Fix were followed by a reversal of at least 50% of the original move,
within 30 or 60 minutes of the London Fix.
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 28 of 35
29
92. These spikes and their reversals indicate the influence of manipulative and
collusive behavior. The pattern is not explained by neutral or benign causes, but plausibly
demonstrates the manipulative conduct of Defendants to move prices on both the physical and
derivative markets to their benefit.
93. The chart below demonstrates from 1998-2013 the rate of forecast error a
square of the difference between predicted market moves based on econometrics and the
markets actual moves. These forecast errors hit a massive peak during the brief period that is
encompassed by the 3 p.m. London Fix. Appendix B contains charts of forecast errors broken
down by year.
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
2010 2011 2012 2013
%

o
f

a
n
o
m
a
l
o
u
s

f
i
x
i
n
g

c
a
l
l

m
o
v
e
s

r
e
v
e
r
s
i
n
g

b
y

a
t

l
e
a
s
t

h
a
l
f
Sample period
Post-fix reversal of anomalous PM fixing call price
moves
30-minute post-fix reversal period 1-hour post-fix reversal period
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 29 of 35
30
0
100
200
300
400
500
600
A
v
e
r
a
g
e

n
u
m
b
e
r

o
f

c
o
n
t
r
a
c
t
s

t
r
a
d
e
d
Average On-The-Run Comex Futures Trading
Volume: 2010-2013
94. This is contrary to what should occur in a market free of manipulation. The
period surrounding 3 p.m. is the time at which the most gold futures contracts are traded, as the
following chart reflects. Accordingly, it should be the period during which the market is
maximally efficient. Instead, it is the direct opposite. This, too, is highly anomalous and
suggestive of market manipulation.
0.000000%
0.000002%
0.000004%
0.000006%
0.000008%
0.000010%
0.000012%
0.000014%
0.000016%
0.000018%
0.000020%
0.000000%
0.000001%
0.000002%
0.000003%
0.000004%
0.000005%
0.000006%
0.000007%
0.000008%
0.000009%
R
o
l
l
i
n
g

3
0
-
m
i
n
u
t
e

r
e
t
u
r
m

f
o
r
e
c
a
s
t

e
r
r
o
r
s
R
o
l
l
i
n
g

3
0
-
m
i
n
u
t
e

l
i
n
e
a
r

f
o
r
e
c
a
s
t

e
r
r
o
r
s
London time
Average Rolling Forecast Errors: Jan 1998 - Dec 2013
Linear Forecast Errors Return Forecast Errors
AM Fixing
PM Fixing
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 30 of 35
31
95. If the volatility surrounding the London Fix were simply a natural reaction of the
market to the London Fix itself and not manipulative trading, it would be expected that the
volatility would have always existed for as long as the London Fix has been reported. In fact, as
demonstrated by the chart below, the London Fix has not always had as pronounced an effect on
prices, but that over time volatility around the London Fix increased. There is no change in the
legitimate public aspect of the London Fix that could explain this. In fact, experts, such as
Trinity College Dublin professor of finance Brian Lucey, have opined that the relevance of the
London Fix to the market should be fading.
20
But increasing volatility over time is consistent
with the advent of manipulative trading and either an increasing number of participants over time
or a more brazen magnitude of manipulation by those participants.
20
Suzi Ring & Nicholas Larkin, FCA Said to Observe London Gold Fixing as Scrutiny Increase,
BLOOMBERG.COM, April 25, 2014, available at: http://www.businessweek.com/news/2014-04-
24/fca-said-to-observe-london-gold-fixing-calls-as-scrutiny-grows
90
100
110
120
130
I
n
t
e
n
s
i
t
y

i
n
d
e
x

v
a
l
u
e
Date
Pre-Fix Volatility - Intensity Index
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 31 of 35
32
96. The above chart depicts the relative volatility of moves in gold in the ten minutes
immediately preceding the AM and PM London Fixings. The increase of this Intensity
index,
21
from a low in 2000 to a peak in 2010 (when the relative volatility of the price
movements was the highest) and continuing through the present (where those pre-call price
movements remain at historically elevated levels), is indicative of manipulative forces at work
that are exclusive of, and more intense than, what the natural effects of the London Fix on the
market may have been in the past.
97. The increasingly unusual pre-Fix activity over the years can also be observed by
looking only at those days when the pre-Fix activity was a downward move in prices. The below
chart depicts an index of the intensity of downward moves in gold immediately preceding the
AM and PM London Fixings. The increase of the index from a relative low in 2000 to a peak in
2010, when the intensity of the downward price movements just prior to the London Fixes was
the most dramatic, carries over to today where the intensity remains at historically elevated
levels.
22
21
This index is based on the volatility of gold prices in the build up to the twice daily London
fixings relative to the volatility of gold prices throughout the full London trading day. The index
itself is made by computing the one-year rolling average of this relative volatility, benchmarked
to an index value of 100 in January 2000. As such, an increase in the relative volatility of pre-fix
moves in gold prices causes the index value to increase, while a decrease in the relative volatility
causes the index to decrease.
22
This chart (on the following page) was developed by first constructing an index based on the
percentage of moves immediately preceding the AM and PM London Gold Fixings that were
negative over a given annual period, rolled forward each day. An inverse cumulative return
index based on the above percentages was then created to show how the intensity changed over
time. This series is benchmarked to an index value of 100 in January 2000. In other words, a
relative increase in the percentage of pre-fix moves in gold prices that are negative in a given
annual period causes the index value to increase, while a decrease in negative observations
causes the index to decrease.
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 32 of 35
33
98. If the increased price volatility and volume accompanying the London Fix could
be explained by the innocent speculation of the greater market on the outcome of the London Fix
price announcement, then it would be expected that the overall impact of that volatility would be
neutral and not increasingly negative over time as the above chart exhibits. That is, sometimes
the market would speculate that the London Fix would lower the price of gold, and sometimes
would raise it, and further that sometimes this speculation would be correct and sometimes
incorrect in roughly equal measure over time.
99. To the contrary, although the London Fix was associated with both manipulative
and abnormal increases and decreases in gold prices, the London Fix appears, in the aggregate, to
have had a net negative effect overall on the price of gold throughout the Class Period. This can
be demonstrated by examining the price of gold during the part of the trading day closest to the
London Fixes. Gold is traded 24 hours a day. The trading day for gold can be broken up into
80
100
120
140
160
180
200
220
240
I
n
t
e
n
s
i
t
y

i
n
d
e
x

v
a
l
u
e
Date
Downward Moves - Intensity Index
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 33 of 35
34
three equal eight-hour periods, the Fixing Period from 8:00-16:00 London Time in which both
the AM and PM London Fixes occur, the Pre-Fix Period from 0:00-8:00 and the Post Fix
Period from 16:00-24:00 London time. If the volatility surrounding the London Fix was purely
random and not the result of manipulation, there would be no significant difference over time
between the period containing the London Fixes (8:00-16:00) and the Pre-Fix and Post-Fix
periods.
100. However, as the chart below demonstrates, gold prices during the Fixing Period
(8:00-16:00) moved consistently lower over time when compared to price activity during Pre-Fix
and Post-Fix portions of the trading day.
23
This trading pattern is consistent with manipulation
and cannot be explained by random variation.
23
The indices for each trading period (Pre-Fix, Fix and Post-Fix) in the chart on this page were
calculated by taking the compound returns of gold prices for each period and ignoring
fluctuations outside of the period, resulting in a series of daily eight-hour returns. A
compounded series with a starting Index value of 100 was calculated, where the movement each
day is given by the compound gold futures price returns for that trading period on the given day.
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 34 of 35
35
101. If participants in the London Fixes were not leaking information or manipulating
prices during the London PM Fix call, it would be unlikely for price activity in the market when
the London Fix call begins to be predictive of prices during the remainder of the call and of the
direction of the London Fix itself. However, price activity in the first minutes immediately after
the start of the call
24
was highly predictive of subsequent prices during the call and of the
ultimate price of the fixing, as the table below shows. This suggests that participants on the call
were trading based on information gleaned in the first moments of the call or disseminated
before the call began.
Period
% of Time Price Activity Immediately After Start of Call
Predicted the Overall Move During Call Window
2010 67%-70%
2011 67%-70%
2012 70%-75%
2013 78%-82%
2010-2013 70%-75%
102. The price activity surrounding the London Fix does not conform to what one
would expect in the lead up to, and announcement of, other regularly scheduled releases of
important market information. Rather, pricing around the London Fixes is anomalous when
compared to the impact of other economic announcements which market participants can trade in
anticipation of. The chart at 89 shows that on average gold prices move in a volatile fashion
before the London Fix price is announced, either during, or even before the beginning of the call
begins. When other important economic numbers are announced, the price action before the
24
The estimation window immediately after the start of the call is defined as a function of the
length of the fixing call on each day. Specifically, if the fixing call is less than or equal to 3
minutes in length, the initial price activity is measured during the first minute. If the call is
between 4 and 5 minutes in length, the first two minutes are used for initial estimation, while the
first three minutes are used for initial estimation for all calls greater than 5 minutes in length.
Case 1:14-cv-05153-VEC Document 2 Filed 07/09/14 Page 35 of 35
36
announcement is relatively muted, and the price moves sharply at the moment of announcement,
presumably because the substance of the announcement has not been leaked beforehand and
manipulation is not taking place.
103. The following two charts demonstrate this pattern using the average intra-day
price movement of gold futures on days of important economic announcements. The first chart
shows the effect of non-farm payroll (NFP) numbers announced monthly by the Bureau of
Labor Statistics. The second chart shows the effect of seven announcements of the Federal
Funds Rate by the Federal Reserve from March through December 2013.
25
25
The Federal Reserve has changed the time of day during which it makes the Federal Funds
Rate announcement several times during the Class Period. The period March December 2013
was chosen because announcements were uniformly made at 2pm New York time. Similar
charts for other time periods can be found in Appendix D.
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 1 of 22
37
104. The distinct price movement at the very moment of release that is the hallmark of
a non-leaked, non-manipulated announcement is most starkly shown in the charts below which
depict the rolling forecast error of gold prices on dates of the NFP and Federal Funds Rate
announcements. Rolling forecast error is simply a measure of how much the magnitude of a
change in prices deviates from what econometric principles would predict.
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 2 of 22
38
105. When the rolling forecast error charts for the Fed Funds Rate and the NFP above
are compared with the one for the London Fix at 93, it is clear that where the former two exhibit
a nearly vertical increase in forecast error (i.e., the increase in statistically anomalous price
movement) at the precise moment of announcement, forecast errors for the London Fix begin
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 3 of 22
39
even before the 15:00 start time of London PM call, not to mention well before the actual
London Fix price is announced.
106. The anomalous price activity surrounding the London Fixes cannot be explained
by generic market forces, such as contemporaneous economic developments or release of news
unrelated to the London Fixes. To illustrate this point, the below charts plot the price movement
of gold for February 3, 2012 (originally charted at 85). As the charts demonstrate, other
commodities (as represented by the Dow-Jones UBS Commodities Index) were not subject to the
same price fluctuations as gold during the period of the London Fixes, neither were bond or
equity markets (represented by the Emerging Market Bonds Index and the MSCI world index,
respectively). A fourth chart compares gold with the aforementioned three indices, and two
others: the U.S Dollar Index and S&P 500 for February 3, 2012.
26
26
Attached as Appendix C are corresponding charts for the remaining four illustrative trading
days cited previously at 84-88: June 14, 2012, November 15, 2012, February 1, 2013 and May
21 2013. These charts exhibit the same lack of correlation between moves in gold prices and
other asset prices that those for February 3, 2012 do.
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 4 of 22
40
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 5 of 22
41
107. In summary, the price activity surrounding the London Fixes is indicative of
manipulation and not natural market forces for the following reasons:
a. Around the period of the London Fix calls, gold prices experience anomalous
volatility in price.
b. This volatility is present not on isolated trading days but manifests even more
clearly when averaged across years of trade data.
c. The anomalous price changes during the call were not maintained afterwards,
but in fact were in some part reversed with an unusual frequency and to an
anomalous degree.
d. The anomalous price moves occurred during peaks in trading volume, when
the market should be at its most efficient.
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 6 of 22
42
e. The pricing anomalies strengthened in intensity over time, demonstrating that
they are not an inevitable result of an innocent fixing process.
f. There were upward and downward manipulations over a period of years, price
activity surrounding the London Fix periods had a net negative effect on gold
prices in comparison to other periods. This tends to indicate that artificial
forces were acting on the market during those periods.
g. Trading activity during immediately after the beginning of the London Fix
was highly predictive of activity during the rest of the call, and of the final
London Fix price, suggesting that manipulative traders were moving the
prices of gold based on information gleaned for the London Fix calls.
h. The price activity surrounding the London Fixes is not typical of the price
activity one would expect to attend a regularly scheduled announcement of
news material to the gold market.
i. The anomalous price activity in the gold market is not mirrored by other
precious metals or broader market indices, further eliminating innocent
explanations and supporting a conclusion that manipulation occurred.
E. Government Investigations and Studies
108. In recent months, numerous reports have confirmed investigations or studies
related into the London Fix and the wrongdoing discussed herein.
109. On March 13, 2013, The Wall Street Journal reported that the CFTC was
examining the setting of prices in London.
27
The Wall Street Journal noted that the London
27
Katy Burne, Matt Day, and Tatyana Shumsky, U.S. Probes Gold Pricing, THE WALL STREET
JOURNAL, March 13, 2013, available at:
http://online.wsj.com/news/articles/SB10001424127887324077704578358381575462340
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 7 of 22
43
Fix helps determine the value of derivatives whose prices are tied to gold further noting that
as of September 30, 2012, U.S. commercial banks had $198 billion of precious metals-related
contracts outstanding.
28
110. In November 2013, it was reported that the Financial Conduct Authority, the
United Kingdoms top financial regulator, had opened an investigation into the London Fix.
29
In
an article detailing the reported investigation, Bloomberg quoted Thorsten Polleit, chief
economist at Frankfurt-based precious-metals broker Degussa Goldhandel GmbH and a former
economist at Defendant Barclays as saying, Traders involved in this price-determining process
have knowledge which, even for a short time, is superior to other peoples knowledge. . . . That
is the great flaw of the London gold-fixing.
30
111. The London Bullion Market Association indicated in November that it was
reviewing its benchmarks to determine whether the benchmarks conform with IOSCO
principles.
31
The IOSCO principles including making prices based on observable deals to
increase transparency.
32
112. Rt. Hon. Pat McFadden, a Labour party lawmaker who sits on Parliaments
Treasury Select Committee indicated that the FCA needed to investigate the gold market, stating
The gold market is hugely influential, and there needs to be public trust in the gold price. . . .
28
Id.
29
Liam Vaughan, Nicholas Larkin, and Suzi Ring, London Gold Fix Calls Draw Scrutiny Amid
Heavy Trading, BLOOMBERG.COM, Nov. 26, 2013, available at:
http://www.bloomberg.com/news/2013-11-26/gold-fix-drawing-scrutiny-amid-knowledge-tied-
to-eruption.html
30
Id.
31
Nicholas Larkin, London Bullion Market Association is Reviewing Benchmarks,
BLOOMBERG.COM, Nov. 22, 2013, available at: http://www.bloomberg.com/news/2013-11-
22/london-bullion-market-association-is-reviewing-benchmarks.html
32
Id.
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 8 of 22
44
Question marks have been raised about the benchmark price of gold, and its important that
regulators investigate.
33
113. In a February 4, 2014 hearing before the House of Commons Treasury
Committee, McFadden questioned FCA CEO Martin Wheatley about the FCAs investigation
into benchmarks other than LIBOR and the WM/Reuters rates, asking Weve had LIBOR.
Weve now got question marks over the foreign exchange markets. Are there any other
benchmarks like this which are fixed here in London that you have concerns about or are
investigating?
34
Wheatley responded, Yes, there are. Those investigations are not public, so I
cant tell what the investigations are, but there are a number of other benchmarks London
being the center it is, there are a number of other benchmarks that operate in London that we are
investigating because of concerns that have been raised with us.
35
114. Defendant DB has reportedly had employees interviewed by Bafin, Germanys
top financial regulator, as a result of Bafins investigation into potential manipulation of gold
prices.
36
115. Elke Koenig, the president of Bafin, indicated that allegations about manipulation
of foreign exchange and precious metals markets (including the gold market) were particularly
serious because such reference values are based unlike LIBOR and EURIBOR typically on
transactions in liquid markets and not on estimates of the banks.
37
Bloomberg characterized his
33
Id.
34
Videorecording, House of Commons Treasury Committee meeting at 1:17:23-1:17:38, Feb. 4,
2014, available at: http://www.parliamentlive.tv/Main/Player.aspx?meetingId=14826
35
Id. at 1:17:39-1:17:53.
36
Karin Matussek and Oliver Suess, Metals, Currency Rigging Is Worse than Libor, Bafin Says,
Bloomberg.com, Jan. 17, 2014, available at: http://www.bloomberg.com/news/2014-01-
16/metals-currency-rigging-worse-than-libor-bafin-s-koenig-says.html
37
Id.
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 9 of 22
45
statement as indicating that the possible manipulation was worse than the Libor-rigging
scandal.
38
116. In fact, two Defendants here have been implicated and paid substantial fines as a
result of investigations into LIBOR-rigging. Defendant Barclays settled with the CFTC,
Department of Justice, and Financial Services Authority (the UKs precursor to the FCA) in June
2012.
39
Barclays avoided a fine from the European Commission by revealing the collusion to the
agency.
40
Defendant DB was fined 725 million by the European Commission, the most of any
LIBOR defendant.
41
117. The same day that Bafin made its comments, it was reported that Defendant DB
would withdraw from participating in setting gold and silver benchmarks.
42
118. On April 25, 2014, Bloomberg.com reported that the FCA indeed investigating
the London Fix, with regulators scheduled to observe the fixing process at the offices of
defendant SocGen, and that regulators would be visiting the offices of all five defendants.
43
38
Id.
39
See Joshua Gallu, Silla Brush, and Lindsay Fortado, Barclays Libor Fine Sends Stocks Lower
As Probes Widen, BLOOMBERG.COM, June 28, 2012, available at:
http://www.bloomberg.com/news/2012-06-28/barclays-451-million-libor-fine-paves-the-way-
for-competitors.html
40
Elena Logutenkova, UBS, Barclays Dodge $4.3 billion EU Fines for Rate Rigging,
BLOOMBERG.COM, Dec. 4, 2013, available at: http://www.bloomberg.com/news/2013-12-04/ubs-
barclays-dodge-4-3billion-eu-fines-for-rate-rigging.html
41
Gaspard Sebag and Aoife White, Deutsche Bank to RBS Fined by EU for Rate Rigging,
BLOOMBERG.COM, Dec. 4, 2013, available at: http://www.bloomberg.com/news/2013-12-
04/deutsche-bank-to-rbs-fined-by-eu-for-rate-rigging.html
42
Maria Kolesnikova and Nicholas Larkin, Deutsche Bank Withdraws from Gold Fixing in
Commodities Cuts, BLOOMBERG.COM, Jan. 17, 2014, available at:
http://www.bloomberg.com/news/2014-01-17/deutsche-bank-withdraws-from-gold-fixing-in-
commodities-cutback.html
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 10 of 22
46
119. Because the FCA does not regulate the market for physical gold, the FCAs
interest in gold manipulation indicates a concern that derivative products based on or linked to
the London Fix or other spot prices are the target of manipulation.
120. As discussed above at 68-72, on May 23, 2014, the FCA fined Barclays the
equivalent of $44 million for its role in manipulating the London Fix for its own benefit.
121. There is no indication that the FCA has closed its investigation of the other
defendants.
F. Indicia of Agreement, Combination, or Conspiracy
122. As discussed above, there are numerous indicia that Defendants conduct was not
merely coincidental but carefully crafted to disturb the efficient operation of markets for physical
gold and gold derivatives.
123. Defendants have each financially benefited from the anticompetitive conduct
described above.
124. Certain of the Defendants have been the subject of numerous investigations and
proposed investigations, including by the Commodity Futures Trading Commission, Financial
Conduct Authority, and Bafin.
125. Defendants have engaged in parallel conduct that would not be consistent with
market forces, declining to take advantage of gross inefficiencies by competitors in the market.
VII. ANTITRUST INJURY
126. Defendants restraints of trade and anticompetitive conduct adversely affected
competition and prices in the market for physical gold and gold derivatives.
43
Suzi Ring & Nicholas Larkin, FCA Said to Observe London Gold Fixing as Scrutiny Increase,
BLOOMBERG.COM, April 25, 2014.
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 11 of 22
47
127. Plaintiff and other Class members were deprived of the benefits of normal market
operation, including market-determined pricing. As a consequence of Defendants conduct,
Plaintiff and the Class suffered substantial financial losses and were, therefore, injured in their
business or property.
128. As shown above, the manipulation detailed herein both artificially inflated and
artificially suppressed the price of gold, injuring both long and short holders of gold futures and
options contracts. To the extent the aggregate trend has been to suppress prices, 99-100, this
has resulted in (as of the last available This Month in Gold Futures Market Report from the
CFTC
44
) an extraordinarily positive result for Commercial Traders in gold futures contracts (who
held between 352,500 and 381,200 short futures contracts, as opposed to merely 140,900 to
145,100 long futures contracts in the same period. This heavy weight toward shorting gold
futures contracts means a net drop in gold prices would be extremely lucrative for commercial
traders.
45
Commercial Traders are entities, such as Defendants, that use futures or options for
hedging purposes, as opposed to non-commercial entities that do not own the underlying asset
or its financial equivalent and hold only derivatives contracts.
129. The CFTC bank participation reports
46
demonstrate that these commercial
shorts are largely non-U.S. banks like Defendants.
Short/Long Positions by Non-U.S. Banks in COMEX Gold Futures Contracts, according to CFTC
Date Long Short Net Position
January 2012 7,710 38,812 Short 31,102
44
These reports were discontinued effective January 2013. See CFTC, This Month in Gold Futures Market,
available at: http://www.cftc.gov/oce/web/gold.htm
45
See CFTC, This Month in Gold Futures Market, available at:
http://www.cftc.gov/oce/web/gold.htm
46
http://www.cftc.gov/marketreports/bankparticipationreports/index.htm
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 12 of 22
48
February 2012 9,161 44,908 Short 35,747
March 2012 11,152 47,409 Short 36,257
April 2012 13,044 50,846 Short 37,802
May 2012 10,372 51,891 Short 41,519
June 2012 9,572 54,413 Short 44,841
July 2012 8,530 58,479 Short 49,949
August 2012 9,199 49,772 Short 40,573
September 2012 10,710 64,144 Short 53,434
October 2012 34,881 113,445 Short 78,564
November 2012 37,503 96,939 Short 59,436
December 2012 35,526 80,033 Short 44,507
January 2013 32,191 78,038 Short 45,847
February 2013 30,272 79,006 Short 48,734
March 2013 29,219 72,545 Short 43,326
April 2013 29,216 73,669 Short 44,453
May 2013 32,483 54,957 Short 22,474
June 2013 24,035 49,075 Short 25,060
July 2013 34,904 58,656 Short 23,752
August 2013 25,956 47,996 Short 22,040
September 2013 23,626 60,350 Short 36,724
October 2013 24,296 57,665 Short 33,369
November 2013 19,006 58,486 Short 39,480
December 2013 25,508 39,547 Short 14,039
January 2014 26,128 32,492 Short 6,364
February 2014 18,752 48,860 Short 30,108
March 2014 17,526 54,385 Short 36,859
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 13 of 22
49
April 2014 20,048 59,025 Short 38,977
At no point for which reports are currently available were non-U.S. banks, such as Defendants,
long on gold futures contracts.
VIII. THE DISCOVERY RULE AND FRAUDULENT CONCEALMENT
130. Plaintiff did not discover, and could not have reasonably discovered through the
exercise of reasonable diligence, the wrongdoing discussed in this complaint, until, at the very
earliest, January 2014, when Defendant DB withdrew from the fixing after interviews with
Bafin, Germanys financial regulator.
131. Before the DB departure was announced and Bafins president revealed the
seriousness of the allegations, Plaintiff could not have stated facts plausibly stating the
conspiracy to manipulate the price of gold and gold derivatives.
132. The activity Defendants undertook was of a self-concealing nature. The London
Fix teleconference is not publicly-accessible. The information Defendants received from their
clients about the demand for purchases and sales of gold before and during the teleconference
were not publicly-accessible. Without these pieces of information, Plaintiff would not be able to
discern market dislocation or the existence of spoof trades.
IX. CLAIMS
COUNT I (PRICE-FIXING)
133. Plaintiff hereby incorporates each preceding and succeeding paragraph as though
fully set forth herein.
134. Beginning at least as early as January 1, 2004, and continuing thereafter,
Defendants and their coconspirators entered into and engaged in a contract, combination or
conspiracy in restraint of trade to artificially manipulate prices of gold and gold derivatives in
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 14 of 22
50
violation of Section 1 of the Sherman Act (15 U.S.C. 1). Such contract, combination or
conspiracy constitutes a per se violation of the federal antitrust laws and is, in any event, an
unreasonable and unlawful restraint of trade.
135. The contract, combination or conspiracy consisted of a continuing agreement,
understanding or concerted action among Defendants and their co-conspirators in furtherance of
which Defendants manipulated and determined the price of physical gold and gold derivatives.
136. Defendants and their coconspirators contract, combination, agreement,
understanding or concerted action occurred within the flow of, and substantially affected
interstate commerce.
137. As a direct and proximate result of Defendants scheme, Plaintiff and the
members of the Class have been injured and financially damaged in their respective businesses
and property, in amounts which are presently undetermined. Plaintiffs injuries consist of
transacting at artificial prices in an artificial and manipulated market. Plaintiffs injuries are of
the type the antitrust laws were designed to prevent, and flow from that which makes defendants
conduct unlawful.
COUNT II (PRICE MANIPULATION)
138. Plaintiff hereby incorporates each preceding and succeeding paragraph as though
fully set forth herein.
139. Defendants and their coconspirators, through the acts alleged in this Complaint,
specifically intended to and did cause unlawful and artificial prices of gold and gold derivatives,
in violation of the Commodity Exchange Act, 7 U.S.C. 1, et seq.
140. Plaintiff and others who transacted in gold futures, including during the Class
Period transacted at artificial and unlawful prices resulting from Defendants manipulations in
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 15 of 22
51
violation of the Commodity Exchange Act, 7 U.S.C. 1, et seq., and as a direct result thereof
were injured and suffered damages.
141. Plaintiff and the Class are each entitled to damages for the violations of the
Commodity Exchange Act alleged herein.
142. Defendants conduct proximately caused injury to Plaintiff and other members of
the Class who transacted in an artificial and manipulated market, at manipulated prices, and with
artificial price trends, during the Class Period.
143. Plaintiff and other members of the Class who purchased or sold gold futures
contracts, including COMEX gold futures contracts during the Class Period were injured and are
each entitled to their actual damages for the violations of the Commodity Exchange Act alleged
herein.
COUNT III (MANIPULATION BY FALSE REPORTING, FRAUD, AND DECEIT)
144. Plaintiff hereby incorporates each preceding and succeeding paragraph as though
fully set forth herein.
145. By their intentional and reckless misconduct, Defendants each violated Section
6(c)(1) of the Commodity Exchange Act, as amended, 7 U.S.C. 9, and caused prices of gold
futures contracts, including COMEX gold, to be artificial during the Class Period. Defendants
delivered and caused to be delivered for transmission through the mails and interstate commerce,
by multiple means of communication, a false or misleading or inaccurate report concerning the
London Fix or other market information or conditions that affect or tend to affect the price of
gold and gold futures, which are commodities in interstate commerce, knowing, or acting in
reckless disregard of the fact that such report was false, misleading or inaccurate.
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 16 of 22
52
146. Under Section 6(c)(1) of the Commodity Exchange Act, as amended, codified at 7
U.S.C. 9, and Section 22 of the Commodity Exchange Act, as amended, 7 U.S.C. 25, it is
unlawful for any person, directly or indirectly, to use or employ or attempt to use or employ, in
connection with any swap, or a contract of sale of any commodity in interstate commerce, or for
future delivery on or subject to the rules of any registered entity, any manipulative or deceptive
device or contrivance, in contravention of such rules and regulations as the CFTC, which shall
promulgate by not later than 1 year after July 21, 2010.
147. In July 2011, the CFTC promulgated Rule 180.1(a), 17 C.F.R. 180.1(a) (2011),
which provides, in relevant part:
It shall be unlawful for any person, directly or indirectly, in connection with any
swap, or contract of sale of any commodity in interstate commerce, or contract for
future delivery on or subject to the rules of any registered entity, to intentionally
or recklessly use or employ, or attempt to use or employ, any manipulative
device, scheme, or artifice to defraud, make, or attempt to make, any untrue or
misleading statement of a material fact or to omit to state a material fact necessary
in order to make the statements made not untrue or misleading.
148. Unlawful manipulation under the Commodity Exchange Act, as amended, and
Rule 180.1 includes delivering, or causing to be delivered for transmission through the mails or
interstate commerce, by any means of communication whatsoever concerning market
information or conditions that affect or tend to affect the price of any commodity in interstate
commerce, knowing, or acting in reckless disregard of the fact that such report is false,
misleading or inaccurate.
149. During the Class Period, Defendants used manipulative or deceptive devices or
contrivances, in connection with contracts of sale of gold in interstate commerce, including, but
not limited to, making untrue or misleading statements of material facts, or omitting material
facts necessary to make the statements not misleading, including:
a. making untrue or misleading statements regarding the London Fix
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 17 of 22
53
b. failing to disclose, and omitting, that they engaged in spoofing
c. failing to disclose, and omitting, that they were unlawfully conspiring
between and among themselves to manipulate COMEX gold prices;
d. issuing statements and directly engaging in the acts alleged herein
knowingly or with reckless disregard for the truth; and
e. employing other deceptive devices as described above.
150. Defendants conduct proximately caused injury to Plaintiff and other members of
the Class who transacted in an artificial and manipulated market, at manipulated prices, and with
artificial price trends, during the Class Period.
151. Plaintiff and the Class are each entitled to damages for the violations of the
Commodity Exchange Act alleged herein.
COUNT IV (PRINCIPAL-AGENT LIABILITY)
152. Plaintiff hereby incorporates each preceding and succeeding paragraph as though
fully set forth herein
153. Defendants BNS, Barclays, DB, HSBC, and SocGen and others were each an
agent and/or other person on behalf of the other Defendants. Because they acted pursuant to and
were members of a conspiracy and unlawful agreement, Defendants acted as one anothers
agents during the Class Period.
154. This included when Defendants, through their employees, agents, and/or others
directed, developed, executed, and otherwise acted with respect to the scheme alleged herein.
Each Defendant is liable under Section 2(a)(1) of the Commodity Exchange Act, 7 U.S.C.
2(a)(1)(B), for the manipulative acts or omissions of its agents, employees, or other persons
acting on their behalf.
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 18 of 22
54
155. Plaintiff and Class members are each entitled to damages for the violations
alleged herein.
COUNT V (AIDING AND ABETTING LIABILITY)
156. Plaintiff hereby incorporates each preceding and succeeding paragraph as though
fully set forth herein.
157. All Defendants are also liable for aiding and abetting manipulation.
158. Each and every Defendant had extensive knowledge of the manipulation and, with
such knowledge, materially assisted the manipulation by the other Defendants.
159. Each Defendant made and benefited from the manipulative acts and willfully
aided, abetted, counseled, induced, and/or procured the commission of violations of the
Commodity Exchange Act by the other Defendants.
160. Each Defendant supervised the making of and benefited from the manipulative
acts and willfully aided, abetted, counseled, induced, and/or procured the commission of
violations of the Commodity Exchange Act by the other Defendants.
161. Each Defendant, by and through their respective partners, agents, employees
and/or other persons, benefited from the manipulative acts and willfully aided, abetted,
counseled, induced, and/or procured the commission of violations of the Commodity Exchange
Act by the other Defendants.
162. Each Defendant participated in the development of the manipulative scheme and
participated in the execution of, and supervised, the manipulative acts. Each Defendant also
benefited from the manipulative acts and willfully aided, abetted, counseled, induced, and/or
procured the commission of violations of the Commodity Exchange Act by the other Defendants.
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 19 of 22
55
163. Defendants each played their component role and each knowingly aided, abetted,
counseled, induced, and/or procured the violations alleged herein. Defendants did so knowing of
each other's manipulation of gold market prices, and willfully intended to assist these
manipulations, which resulted in COMEX gold futures contracts reaching artificial levels during
the Class Period in violation of Section 22(a)(1) of the Commodity Exchange Act, 7 U.S.C.
25(a)(l).
164. Plaintiff and the members of the Class are each entitled to actual damages for the
violations of the Commodity Exchange Act alleged herein.
COUNT VI (UNJUST ENRICHMENT)
165. Plaintiff hereby incorporates each preceding and succeeding paragraph as though
fully set forth herein.
166. Because of the acts of Defendants and their coconspirators as alleged herein,
Defendants have been unjustly enriched at the expense of Plaintiff and members of the Class.
167. Plaintiff and members of the Class seek restoration of the monies of which they
were unfairly and improperly deprived, as described herein.
X. DEMAND FOR JUDGMENT
168. WHEREFORE, Plaintiff, on behalf of himself and the proposed Class,
respectfully requests that the Court:
169. Determine that this action may be maintained as a class action pursuant to Federal
Rule of Civil Procedure 23(a) and (b)(3), direct that reasonable notice of this action, as provided
by Federal Rule of Civil Procedure 23(c)(2), be given to the class, and declare Plaintiff as the
representative of the Class and Plaintiffs counsel as counsel for the Class;
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 20 of 22
56
170. Determine that the Defendants have violated Sections 1 of the Sherman Act and
award Plaintiff and the Class treble damages, as well as costs and attorneys fees, as well as
injunctive relief;
171. Determine that Defendants have violated the Commodity Exchange Act and
award Plaintiff and the Class damages;
172. Decree that Defendants have been unjustly enriched by their wrongful conduct
and award restitution and disgorgement to Plaintiff and members of the Class;
173. Award Plaintiff and the Class all available pre-judgment and post-judgment
interest, to the fullest extent available under law or equity; and
174. Order such other, further and general relief as is just and proper.
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 21 of 22
Case 1:14-cv-05153-VEC Document 2-1 Filed 07/09/14 Page 22 of 22
1
Appendix A
Average Intraday Price Fluctuations in Gold by Year
This Appendix provides an annual breakdown of the average normalized gold price chart
presented in 93. These charts further highlight how the spikes in gold prices around the twice
daily fixings had a more pronounced impact in the later years of the sample.
999.4
999.6
999.8
1000.0
1000.2
1000.4
1000.6
1000.8
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Physical Gold Price: Jan 1998 - Dec 1998
AM Fixing
PM Fixing
999.2
999.4
999.6
999.8
1000.0
1000.2
1000.4
1000.6
1000.8
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Physical Gold Price: Jan 1999 - Dec 1999
AM Fixing
PM Fixing
Case 1:14-cv-05153-VEC Document 2-2 Filed 07/09/14 Page 1 of 12
2
998.8
999.0
999.2
999.4
999.6
999.8
1000.0
1000.2
1000.4
1000.6
1000.8
1001.0
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Physical Gold Price: Jan 2000 - Dec 2000
AM Fixing
PM Fixing
998.8
999.0
999.2
999.4
999.6
999.8
1000.0
1000.2
1000.4
1000.6
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Physical Gold Price: Jan 2001- Dec 2001
AM Fixing
PM Fixing
Case 1:14-cv-05153-VEC Document 2-2 Filed 07/09/14 Page 2 of 12
3
999.4
999.6
999.8
1000.0
1000.2
1000.4
1000.6
1000.8
1001.0
1001.2
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Physical Gold Price: Jan 2002 - Dec 2002
AM Fixing
PM Fixing
999.2
999.4
999.6
999.8
1000.0
1000.2
1000.4
1000.6
1000.8
1001.0
1001.2
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Physical Gold Price: Jan 2003 - Dec 2003
AM Fixing PM Fixing AM Fixing PM Fixing
Case 1:14-cv-05153-VEC Document 2-2 Filed 07/09/14 Page 3 of 12
4
999.0
999.2
999.4
999.6
999.8
1000.0
1000.2
1000.4
1000.6
1000.8
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Physical Gold Price: Jan 2004 - Dec 2004
AM Fixing
PM Fixing
999.4
999.6
999.8
1000.0
1000.2
1000.4
1000.6
1000.8
1001.0
1001.2
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Physical Gold Price: Jan 2005 - Dec 2005
AM Fixing
PM Fixing
Case 1:14-cv-05153-VEC Document 2-2 Filed 07/09/14 Page 4 of 12
5
999.0
999.2
999.4
999.6
999.8
1000.0
1000.2
1000.4
1000.6
1000.8
1001.0
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Physical Gold Price: Jan 2006 - Dec 2006
AM Fixing
PM Fixing
999.2
999.4
999.6
999.8
1000.0
1000.2
1000.4
1000.6
1000.8
1001.0
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Physical Gold Price: Jan 2007 - Dec 2007
AM Fixing
PM Fixing
Case 1:14-cv-05153-VEC Document 2-2 Filed 07/09/14 Page 5 of 12
6
998.0
998.5
999.0
999.5
1000.0
1000.5
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Physical Gold Price: Jan 2008 - Dec 2008
AM Fixing
PM Fixing
998.5
999.0
999.5
1000.0
1000.5
1001.0
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Physical Gold Price: Jan 2009 - Dec 2009
AM Fixing
PM Fixing
Case 1:14-cv-05153-VEC Document 2-2 Filed 07/09/14 Page 6 of 12
7
998.5
999.0
999.5
1000.0
1000.5
1001.0
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Comex Futures Price: Jan 2010 - Dec 2010
AM Fixing
PM Fixing
998.5
999.0
999.5
1000.0
1000.5
1001.0
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Comex Futures Price: Jan 2011- Dec 2011
AM Fixing
PM Fixing
Case 1:14-cv-05153-VEC Document 2-2 Filed 07/09/14 Page 7 of 12
8
999.0
999.2
999.4
999.6
999.8
1000.0
1000.2
1000.4
1000.6
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Comex Futures Price: Jan 2012 - Dec 2012
AM Fixing PM Fixing
996.5
997.0
997.5
998.0
998.5
999.0
999.5
1000.0
1000.5
N
o
r
m
a
l
i
z
e
d

f
u
t
u
r
e
s

p
r
i
c
e

p
e
r

t
r
o
y

o
z
.
,

b
a
s
e

=

1
0
0
0

U
S
D
London time
Average Normalized Comex Futures Price: Jan 2013 - Dec 2013
AM Fixing PM Fixing
Case 1:14-cv-05153-VEC Document 2-2 Filed 07/09/14 Page 8 of 12
1
Appendix B
Linear Forecast Errors and Return Forecast Errors by Year
In the charts below is a statistical measure of the extent to which gold prices are different from
the immediately preceding prices (Linear Forecast Errors) and the extent to which gold returns
are different from immediately preceding gold returns (Return Forecast Errors). See 93.
Physical gold prices for all annual charts pre-2010, and Comex gold futures prices thereafter due
to data availability.
Case 1:14-cv-05153-VEC Document 2-2 Filed 07/09/14 Page 9 of 12
2
Case 1:14-cv-05153-VEC Document 2-2 Filed 07/09/14 Page 10 of 12
3
Case 1:14-cv-05153-VEC Document 2-2 Filed 07/09/14 Page 11 of 12
4
Case 1:14-cv-05153-VEC Document 2-2 Filed 07/09/14 Page 12 of 12
5
Case 1:14-cv-05153-VEC Document 2-3 Filed 07/09/14 Page 1 of 8
6
Case 1:14-cv-05153-VEC Document 2-3 Filed 07/09/14 Page 2 of 8
7
Case 1:14-cv-05153-VEC Document 2-3 Filed 07/09/14 Page 3 of 8
8
Case 1:14-cv-05153-VEC Document 2-3 Filed 07/09/14 Page 4 of 8
9
Appendix C
CHARTS COMPARING INTRADAY GOLD PRICES WITH PRICES OF
OTHER ASSETS FOR SELECTED TRADING DAYS (See 106)
January 4, 2012:
September 4, 2012:
Case 1:14-cv-05153-VEC Document 2-3 Filed 07/09/14 Page 5 of 8
10
February 1, 2013:
May 21, 2013:
Case 1:14-cv-05153-VEC Document 2-3 Filed 07/09/14 Page 6 of 8
1
Appendix D
THE FEDERAL FUNDS RATE ANNOUNCEMENT AND ITS IMPACT ON GOLD
PRICES (See 103-04)
Federal Funds Rate Announcements Made During April 2011- December 2012
When Announcements Were Made at 12:30pm New York Time:
Case 1:14-cv-05153-VEC Document 2-3 Filed 07/09/14 Page 7 of 8
2
Federal Funds Rate Announcements Made During January 2010-January 2013
When Announcements Were Made at 2:15pm New York Time:
Case 1:14-cv-05153-VEC Document 2-3 Filed 07/09/14 Page 8 of 8