NEW YORK: HSBC, Deutsche Bank and Canada’s Bank of Nova Scotia have been accused of conspiring to fix the price of silver in a US lawsuit filed in federal court in New York.

Plaintiff Scott Nicholson, an investor from the north-western US state of Washington, said the three banks had “abused” their position to rig silver prices to the detriment of investors, according to the suit.

“The extreme level of secrecy creates an environment that is ripe for manipulation,” Nicholson’s lawsuit, seen by AFP on Saturday, alleges.

“Defendants have a strong financial incentive to establish positions in both physical silver and silver derivatives prior to the public release of silver fixing results, allowing them to reap large illegitimate profits.”

The lawsuit accuses the three banks of malpractice stretching back to January 1, 2007.

Contacted by AFP, HSBC and Deutsche Bank declined to comment. Bank of Nova Scotia was not immediately available for comment.

Nicholson is hoping other investors who feel they may have been wronged will come forward in order to launch a class-action lawsuit.

Deutsche Bank, HSBC and Bank of Nova Scotia set benchmark prices for silver once every day during a conference call.

The benchmark is used by central banks to assess the value of metals, impacting the price of jewellery as well as revenues from mining companies.

Published in Dawn, July 27th, 2014