Posted by on October 12, 2016 2:20 pm
Categories: Gold-Fix: ScotiaBank Ordered to Produce Internal Documents News Silver Doctors US News

from Silver Doctors:

Last week Marketslant was fortunate enough to break the story on Judge Caproni’s decision in the Gold Fix manipulation case. The decision is a landmark one and changes the landscape forever in commodity manipulation cases. Simply put, things are just getting started now. And today’s news is the first step.

We had received the original document from Kitco News’ Chief Editor “Dani“. Our goal at that time was to strip out the legalese and make the case particulars plain for readers. What was not discussed were the implications of the Judge’s finding for the Plaintiffs. In light of the first discovery demand, we will try to outline the rulings implications.

UPDATE:Scotia Bank Gets Tapped for Documents
Today, we learned that Scotia Bank, one of 5 defendant banks in the case, is the first to be ordered to produce internal documents requested by the plaintiffs. These documents go back years covering emails, Instant Message records, internal memorandums, notes from risk meetings and anything the plaintiffs’ attorneys think to ask for that could help their case. Things are about to start getting interesting. Here’s why.

Why Things are Different Now
Judge Caproni’s decision was a landmark event for the plaintiffs. It is the first time that a precious metals manipulation case had made it past the “Opinion and Order” stage with a recommendation the case be litigated.

The decision is key in that the plaintiffs will be able for the first time to obtain evidence through discovery and depositions of the defendants. We cannot emphasize that enough. A barrier has been broken that cannot be put back in place. The production of discovery, depositions of witnesses, and other evidentiary processes have never been on the table before are now accessible.

The Defendants Have Risk
Using a different analogy, cans of worms are being opened now. The defendants have real risks now. Risks like: perjury, internal contradictions, contradictions across different firms, and escalation up the corporate ladder (respondeat superior). The defendants know it. And Daniel Brockett, the point man for the plaintiffs knows it.

“They have to produce all the relevant emails and chat room instant messages, however they communicated with each other”–Daniel Brockett, senior partner and litigator at Quinn Emanuel Urquhart & Sullivan LLP

So, to what ends do these requests for documents serve?

What Do the Plaintiffs Hope to Find?
2016 Silver Eagles SaleBroadly speaking, we believe the plaintiffs’ attorneys hope to find 2 types of proof from the documents; proof of intent and proof of Sherman Antitrust law violations. In essence: 1) Did they mean it? and 2) Were they working together?

Proving Intent-The Plaintiffs’ attorneys will look for evidence of intent. Intent is the most difficult part to prove in any manipulation case. Intent involves knowing what the “manipulator” was thinking leading up to the action. Essentially, did the offender intend to do what he did? There are at least 3 ways of proving intent, none of which are easy.

The defendant admits it- a product of depositions and/or discovery
A written audit trail that shows intent exists- discovery
An email in which a defendant describes why he did a trade- a written admission
An internal inquiry asking for justification in the scope of the firm’s risk- usually involves a superior officer and getting the 2 parties to contradict each other in deposition
An operational or programming person was made privy to the intent as a function of their duties.- underutilized in our opinion
These are very real risks and if the defendants don’t “get their story straight” (not pejorative), any divergence between word and deed can hurt their credibility and open the door for more aggressive tactics by the plaintiffs.

Proving Antitrust Law Violations-The plaintiffs will seek putative damages under the Sherman Anti-trust act. Specifically under Section 1 governing unlawful restraint of trade. Section 1 delineates and prohibits specific means of anti-competitive conduct. The plaintiffs seek to prove collaboration between 2 or more defendant banks. They will attempt to prove cartel-like behavior between the defendants. The burden of proof here, even with evidence is high.

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