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HSBC, Scotiabank (BNS) Win Silver-Price-Fixing Lawsuit Dismissal

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The lawsuit against HSBC Holdings plc (HSBC - Free Report) and The Bank of Nova Scotia (BNS - Free Report) relating to silver-price-fixing has been dismissed. The news was reported by Reuters.

On Monday, U.S. District Judge Valerie Caproni in Manhattan dismissed the long-running litigation by investors who accused the banks of colluding to fix silver prices.

Along with HSBC and BNS, Deutsche Bank AG (DB - Free Report) was accused of manipulating silver prices from 2007 to 2013. Investors claimed that they had “smoking gun” evidence of a price-fixing conspiracy among these banks and several other silver market makers.

The lawsuit began in 2014 and two years later, Deutsche Bank agreed to settle for $38 million.

However, Caproni has claimed that investors lacked legal standing to pursue federal antitrust claims under the Sherman Act or claims under the federal Commodity Exchange Act.

Caproni found that investors were unable to trace their losses to banks’ alleged effort to depress the fix, which set benchmark prices for silver bars and trade derivatives based on advanced knowledge of the fix price.

Per Caproni, investors did not show that it was “plausible, as opposed to merely possible” that distorted pricing affected their trades. Also, any of the damages were “too speculative.”

Caproni added that investors were not “efficient enforcers” of their private antitrust claims, unlike people who might have sold silver at the fix price.

Thus, Caproni has dismissed the lawsuit with prejudice. Hence, it cannot be brought again.

Lawyers for investors did not immediately respond to requests for comment. Neither did HSBC nor BNS respond to similar requests.

Over the past year, shares of HSBC have gained 16.2%, whereas the BNS stock has depreciated 24.8%. The industry to which the stocks belong has rallied 1.9%.


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Currently, HSBC and BNS carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Legal troubles have been continuing for HSBC and BNS of late. Earlier this month, the Securities and Exchange Commission (“SEC”) slapped units of Scotiabank and HSBC with civil penalties for widespread record-keeping violations through employees’ use of personal devices and apps for work communications.

BNS and HSBC agreed that they had failed to meet record-keeping requirements for dealers registered with U.S. market regulators.

Hence, HSBC agreed to pay $15 million to settle the charges, whereas BNS agreed to pay $22.5 million.

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