* Deutsche Bank says case 'without merit'
* Societe Generale says lawsuit's claims unsubstantiated
LONDON, March 5 The five banks involved in
setting the London benchmark gold price have been accused in a
lawsuit of price manipulation, a filing with a U.S. federal
court in New York showed.
In the filing with the U.S. District Court in Manhattan
dated March 3, New York resident Kevin Maher, who says he bought
and sold gold and gold futures and options, alleged the banks
overseeing the benchmark - Societe Generale, Deutsche
Bank, Barclays, Bank of Nova Scotia
and HSBC - colluded to manipulate it.
Maher is bringing the suit as a class action, on behalf of
himself and other investors who held or traded gold and gold
derivatives that were settled based on the gold fix, or who held
or traded COMEX gold futures or options, from 2004 to now.
In a statement, Deutsche said it believed the suit was
without merit and that the bank "will vigorously defend against
A spokesperson for Societe Generale said: "Societe Generale
appears to have been named as a defendant in these proceedings
together with other members of the London Gold Market Fixing
Ltd. The claims are unsubstantiated and Societe Generale will
defend these proceedings."
Barclays and HSBC declined to comment, while Bank of Nova
Scotia could not immediately be reached.
The suit is seeking unspecified damages.
Gold fixing happens twice a day in a teleconference between
banks. At the start of each fixing, the chairman announces an
opening price to the other members, who relay that to their
customers and, based on orders received from them, instruct
their representatives to declare themselves buyers or sellers at
The price is adjusted up and down until demand and supply
are matched, at which point the price is declared "fixed". The
fixings are used to help determine prices globally.
Regulators including Germany's Bafin are looking more
closely at how banks set benchmarks such as the gold fix after
the Libor rigging scandal exposed widespread interest-rate
manipulation. Britain's Financial Conduct Authority
also said it was broadly looking at gold as part of an
investigation into commodity benchmarks.
In January, Deutsche Bank said it was quitting the process
after withdrawing from the bulk of its commodities business.
South Africa's Standard Bank, now selling a
controlling stake in its markets unit to China's ICBC
, is emerging as a front-runner to buy Deutsche's
place in the global gold price-setting process, sources familiar
with the matter told Reuters last month.