A New York resident is suing Barclays Plc, Deutsche Bank AG, and three other banks for alleged manipulation of the London gold fix, Bloomberg reported on Wednesday.
Kevin Maher, the plaintiff, is “seeking to represent” investors who traded in the yellow metal over the past decade with prices based on the London fix – the world’s gold price benchmark. The five banks set the gold price twice per day through teleconferences.
Maher’s lawsuit is just one part of a growing scandal surrounding the London gold fix; the process is already the subject of investigations.
Late last year the UK Financial Conduct Authority launched a probe into the way gold prices are set in London.
In January Deutsche Bank announced its exit from the price-setting process, amid investigations by German regulators over suspected price manipulation.
Deutsche Bank said the move was part of its strategy to scale back its commodities business.
Then last week Bloomberg reported on a research paper from New York University that showed signs of gold price manipulation in London.
“The structure of the benchmark is certainly conducive to collusion and manipulation, and the empirical data are consistent with price artificiality,” the unpublished paper read, as reported by Bloomberg. “It is likely that co-operation between participants may be occurring.”
The paper’s authors, Rosa Abrantes-Metz and Albert Albert Metz, also authored a paper in 2008 which helped uncover the Libor Scandal.
Maher cites Bloomberg’s report in his law suit.
A spokeswoman for Deutsche Bank told Bloomberg the suit is “without merit.”