A New York federal judge gave preliminary approval last month to an agreement by Deutsche Bank AG to pay investors and others $60 million to settle claims that it engaged in illegal price-fixing of the gold market. U.S. District Judge Valerie Caproni said the agreement between Deutsche Bank and investors and traders who brought the suit against the bank and others appeared adequate. The order said: “The court preliminarily finds that the settlement encompassed by the Settlement Agreement raises no obvious reasons to doubt its fairness.”
Judge Caproni also appointed Quinn Emanuel Urquhart & Sullivan LLP and Berger & Montague PC as co-lead counsel for the settlement class for settlement purposes only. The settlement class includes anyone who sold physical gold or derivatives based on gold or bought gold put options on COMEX or other exchanges from Jan. 1, 2004, through June 30, 2013.
The parties had asked Judge Caproni to grant preliminary approval to the settlement on Dec. 2, saying it would potentially benefit thousands of class members. The agreement also calls for Deutsche to provide information to assist with the ongoing action.
Documents provided by Deutsche have already led to further claims against the banks. The investors have asked the court’s permission to file a third amended complaint to incorporate information they said would show Deutsche and UBS AG traders engaged in coordinated activities and exchanges of confidential information as well as the existence of a conspiracy prior to 2006, even though Judge Caproni has already dismissed such claims.
UBS has fought back against the request, saying the investors are trying to retool their theories about UBS’ role in the alleged scheme and are changing the fundamental nature of the suit from a benchmark manipulation case to one over spot market order manipulation.
The putative antitrust class action was originally filed in March 2014 alleging that big banks conspired to manipulate the London gold fix, which is used as a benchmark to determine the price of gold and gold derivatives.
In addition to UBS and Deutsche, the investors have alleged that HSBC, Societe Generale SA, The Bank of Nova Scotia and Barclays participated in the scheme. The banks set the London gold fix – which dates to 1919 – twice per day through conference calls, once in the morning and once in the afternoon. The chairman proposes an opening price, and firms declare how many bars of gold they want to buy or sell at that price based on client orders and their own proprietary needs. The price is increased or decreased until supply matches demand, at which point the price is declared fixed.
The Plaintiffs are represented by Daniel L. Brockett, Daniel P. Cunningham and Steig D. Olson of Quinn Emanuel Urquhart & Sullivan; and Merrill G. Davidoff, Michael C. Dell’Angelo and Zachary D. Caplan of Berger & Montague. The multidistrict litigation (MDL) is In Re: Commodity Exchange Inc., Gold Futures and Options Trading Litigation in the U.S. District Court for the Southern District of New York.