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Key metals player Bank of Nova Scotia admits rigging gold and silver futures

Section: Documentation

11:09a ET Tuesday, October 2, 2018

Dear Friend of GATA and Gold:

Few players in the gold and silver markets are bigger than the Bank of Nova Scotia, whose metals trading division, Scotia Mocatta, is world-renowned. The Bank of Nova Scotia is a member of the London Bullion Market Association and has had a seat at the daily London gold price fixing.

And this week the bank admitted to the U.S. Commodity Futures Trading Commission that its traders manipulated the gold and silver futures markets through "spoofing" from June 2013 through June 2016.

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Rory Hall of The Daily Coin, who brought the CFTC's action to GATA's attention today, notes that the developed has been grossly underreported:

Indeed, at this hour your secretary/treasurer can find only one news story about it, from Marketwatch, which is very brief:

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Bank of Nova Scotia Charged with Spoofing in Gold, Silver Futures

By Steve Goldstein
MarketWatch, New York
Monday, October 1, 2018

The Bank of Nova Scotia was charged by the Commodity Futures Trading Commission with multiple acts of spoofing in gold and silver futures between June 2013 and June 2016. Traders placed orders to buy or sell precious metals futures contracts with the intent to cancel the orders before execution, the CFTC said.

The CFTC fine was $800,000, as the CFTC said the penalty was substantially reduced because the bank reported the conduct to the agency.

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Far from criticizing the bank, the CFTC's announcement yesterday about the misconduct actually praises the bank for having reported the misconduct itself:

The CFTC's enforcement director, James McDonald, says:

"This case is another great example of the significant benefits of self-reporting and cooperation. We expect market participants to take proactive steps to prevent this sort of misconduct before it starts. But, as this case shows, there is a strong incentive for market participants to quickly and voluntarily report wrongdoing when it is discovered and cooperate with our investigation, as the Bank of Nova Scotia did here. In recognition of its self-reporting and cooperation, the commission imposed a substantially-reduced penalty."

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Wikipedia notes Scotia Mocatta's key position in the monetary metals markets throughout history:

"The Mocatta firm has historically acted for central banks, notably the Bank of England and the United States Treasury in market stabilizations, notably the 1913 run on the Indian Specie Bank and the 1980 attempt by the Hunt brothers to corner the silver market."

Of course spoofing the monetary metals futures markets might be considered a mechanism of "stabilization" as well.

In any case market rigging now has been acknowledged to have been perpetrated at the very center of the international gold and silver business.

Not that anyone but the tireless researcher of silver market rigging, Ted Butler, will catch the significance of the dates in yesterday's announcement from the CFTC, but the regulatory agency closed without result its long-running investigation of silver market rigging in September 2013. That is, the CFTC closed its investigation of silver market rigging three months after the Bank of Nova Scotia's rigging of gold and silver futures began.

Maybe the CFTC's chronic blindness to the rigging of the monetary metals markets gave the bank the impression that they were fair game.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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