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Justice Department tries to stall discovery in silver price-fixing case

Section: Daily Dispatches

Silver Investors Slam Justice Department Discovery Halt in Silver Price-Fixing Case

By Kelcee Griffis, New York
Wednesday, February 1, 2017

NEW YORK -- Silver investors accusing major banks of price-fixing urged a New York federal court in a document posted Tuesday to forgo the U.S. Department of Justice's proposed one-year discovery stay, asking the court to strike a compromise to "better balance the governmental and private interests at stake."

In a heavily redacted document dated Jan. 19 but posted Tuesday, the investors asked to keep open the broader discovery in their consolidated proposed class action against banks including HSBC and The Bank of Nova Scotia, saying the Justice Department's timeline to accommodate its criminal investigation would severely hamper the present multidistrict litigation.

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"The department does not proffer any time frame for when it might file charges against any of its targets. Thus, the department's proposal will result in a lengthy stay of this action," the investors wrote.

The government asked to join the suit in early January and requested a partial yearlong stay of civil discovery while it conducts criminal investigations, saying the move would actually make way for the civil suit to forge ahead.

"In any event -- and far from grinding to a halt -- the proposed partial stay will allow significant aspects of the civil litigation and civil discovery to continue," the department contended in a Jan. 9 memorandum.

The silver investors in the multidistrict litigation made clear on Tuesday they don't oppose the government's joining the suit, but they do take issue with it potentially slowing down their discovery.

The investors said they already made concessions involving depositions and proposed a type of three-month embargo that the department could renew periodically.

The plaintiffs said that if the court balances the department's interests with their own, the agency could agree to produce certain documents "on an attorneys' eyes-only basis."

"This would allow plaintiffs to review documents and be ready to take depositions when the embargo is lifted, but also protect the department's investigation by preventing public disclosure of the materials until the embargo ends," the opposition brief said.

But the department already flatly rejected that proposal, the investors said.

Still, it would not be fair to force the proposed class to move for certification without the benefit of sufficient discovery, according to the filing.

In November a judge signed off on Deutsche Bank's $38 million settlement with the class of investors who participated in U.S.-related trades of silver or silver derivatives dating back to January 1999.

In a December motion to file a third consolidated amended class-action complaint, the investors urged the court to add as defendants Barclays Bank and affiliates, BNP Paribas Fortis, Standard Chartered Bank, and Bank of America Merrill Lynch. The investors also asked the court to revive their previously dismissed claims against UBS.

The suit had alleged Deutsche Bank, HSBC, and Bank of Nova Scotia colluded to fix the price of silver futures to ensure the banks received high returns as part of The London Silver Market Fixing Ltd., which has set the price of physical silver since 1897.

Counsel for the parties could not be immediately reached for comment Wednesday.

The plaintiffs are represented by Barbara J. Hart, Vincent Briganti, Geoffrey M. Horn, Raymond Girnys, Christian P. Levis, and Michelle E. Conston of Lowey Dannenberg Cohen & Hart, and James J. Sabella, Robert G. Eisler, and Charles G. Caliendo of Grant & Eisenhofer PA.

Deutsche Bank is represented by Rob Khuzami, Joseph Serino and Kuan Huang of Kirkland & Ellis and Peter J. Isajiw of King & Spalding.

UBS AG is represented by David J. Arp, Melanie L. Katsur, Joel S. Sanders, Peter Sullivan, Indraneel Sur, and Lawrence J. Zweifach of Gibson Dunn.

The case is In re: London Silver Fixing Ltd. Antitrust Litigation, case number 1:14-md-02573, in the U.S. District Court for the Southern District of New York.

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