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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: PaulM who wrote (6890)	1/28/1998 3:19:00 PM
From: Kent C.	Read Replies (2) \| Respond to of 116954

Silver price rigging charged Wall Street powerhouses hid Comex supplies to inflate prices, suit alleges January 28, 1998: 12:47 p.m. ET CNNfn's commodities page cnnfn.com NEW YORK (Reuters) - The law firm of Lovell & Stewart filed suit in federal court here late Tuesday against Phibro Inc. and Phibro Energy Clearing Inc., units of Travelers Group, alleging manipulation of the silver market. The suit, which the law firm confirmed Wednesday, was filed in U.S. District Court in the Southern District of New York under the Commodities Exchange Act and alleges Phibro forced up silver prices artificially in late 1997. In response, Phibro categorically denied the charges. "The current allegations are so egregious that we are compelled to respond," Phibro general counsel Michael Young told Reuters. The suit, which is seeking class action status, was filed on behalf of Kerry Seale and his privately held company, Golden Harvest Co., based in British Columbia, Canada. It alleges that Phibro, with the help of other parties including Republic National Bank of New York, bought or removed silver from the warehouses of COMEX, a division of the New York Mercantile Exchange, and moved the silver to bank vaults in London to give the appearance of a fall in silver supplies, subsequently forcing up silver prices. The suit claims that "Phibro and/or other defendants, acting for their own accounts and/or other persons (including hedge funds or commodity funds) have participated in, or aided, the buying and removal from registration of supplies of silver at COMEX." COMEX warehouse silver inventories fell steadily last year from 203 million ounces to a 12-year low. As of Tuesday, COMEX silver inventories stood at about 104 million ounces. Defendants acting for their own accounts or the accounts of other persons helped move COMEX silver from storage, the suit says. The suit alleges that the activity by Phibro was carried out with the assistance of Republic National Bank of New York and claims that the commodity trader J. Aron & Co. and "other persons" made inquiries in Europe about resmelting COMEX silver bars in order to make them more acceptable for storage at the vaults of banks that are members of the London Bullion Market Association. J. Aron & Co. is the commodity trading arm of investment bank, Goldman Sachs. The suit notes that, in contrast to COMEX silver inventories, silver supplies in London held by members of the London Bullion Market Association, are not publicly reported on a daily, weekly or monthly basis, and are not part of the world's visible silver supply. The suit says that by participating in the buying or removal of the registered silver from visible COMEX silver supplies and by shipping it to non-reporting locations in England (including the vaults of J.P. Morgan and Credit Suisse), the defendants caused the world's visible inventories of silver to decrease dramatically. The lawsuit said that "the motives of defendants in tacitly or explicitly joining together with one another for their foregoing manipulative acts have been to engage in the self-fulfilling prophecy of forcing up silver futures and other silver prices, thereby creating profits on their large silver positions." The claim says that the defendants manipulation of the silver market was "so effective that, while COMEX gold futures prices plummeted to their lowest point in 10 years, the defendants forced up COMEX silver futures prices to their highest point in almost nine years." The suit claims that the movement of COMEX gold and silver prices in opposite directions was "unprecedented." Officials from Travelers and Goldman Sachs weren't immediately available for comment cnnfn.com