In re Commodity Exchange, Inc.
213 F. Supp. 3d 631
| S.D.N.Y. | 2016Background
- Plaintiffs (sellers of physical gold, COMEX gold futures, gold ETFs or options) allege that the five London Gold Market Fixing Ltd. (LGMF) fixing banks (BNS, Barclays, Deutsche Bank, HSBC, Société Générale) and UBS conspired to suppress the PM gold "Fix" price from Jan 1, 2004–June 30, 2013, harming sellers whose transactions incorporated or tracked the Fix.
- The Fixing was a twice-daily, private Walrasian auction (AM and PM) administered by LGMF and conducted by the Fixing Banks; the PM Fix occurred at 3:00 P.M. London time and was unrecorded with no third‑party administrator during most of the class period.
- Plaintiffs rely primarily on statistical analyses of intraday pricing (spot, futures, ETF) and approximately 300,000–846,000 quotes around the PM Fix to show unusually frequent and large downward price moves clustered at the PM Fix, coupled with clustered below-market quotes by defendants on manipulation days.
- Plaintiffs allege motive (foreknowledge of Fix outcomes to trade advantageously; an asserted aggregate ‘‘net short’’ position theory) and cite regulatory probes and past bank misconduct in LIBOR/FX as circumstantial evidence; however, there is no direct evidence of conspiratorial communications in the complaint.
- Procedural posture: consolidated MDL action; Second Consolidated Amended Complaint filed; motions to dismiss by UBS, the Fixing Banks, and LGMF. Court: Caproni, J. Rulings: UBS dismissed in full; many claims survived as to the Fixing Banks and LGMF for the 2006–2012 window; certain claims/time periods and the unjust enrichment and ETF-based antitrust claims were dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Constitutional standing | Plaintiffs lost money on gold-related investments tied to the Fix; allegations of lingering artificiality suffice | Plaintiffs did not transact at times prices were artificial so no concrete injury | Standing satisfied; plaintiffs plausibly allege concrete, traceable injury |
| Antitrust standing (Clayton Act §4) | Sellers in secondary markets harmed because Fix is market benchmark; injury "inextricably intertwined" with conspirators’ conduct | Only direct participants in the Fix should have standing; umbrella/indirect purchases lack standing | Some plaintiffs (not ETF shareholders) have antitrust standing for 2006–2012; ETF-share claims dismissed for duplicative/derivative injuries |
| Sherman Act §1 conspiracy pleading | Parallel conduct plus "plus factors" (timing at PM Fix, clustered low quotes, motive from foreknowledge/regulatory findings) suffice to infer agreement | Alleged patterns reflect normal market forces, liquidity, common client mix; statistical evidence insufficient without direct communications | Complaint plausibly alleges conspiracy as to Fixing Banks from 2006–2012 (denied dismissal for that period); earlier and later periods dismissed |
| CEA manipulation and manipulative‑device claims | Alleged ability, artificiality around PM Fix, causation and scienter met via statistical anomalies, clustered quotes, motive/opportunity; post‑Aug 15, 2011 device rule applies | Lack of direct proof of causation/intent; some claims pre‑August 2011 not governed by Rule 180.1 | Price‑manipulation claims under the CEA survive; manipulative‑device claims under Rule 180.1 survive only for post‑Aug 15, 2011 conduct; pre‑Aug 15 device claims dismissed |
| Aiding & abetting / principal‑agent liability under CEA | Banks participated in and enabled the Fix; agents (traders) acted within scope | Insufficient particularized allegations of specific agents/actions | Aiding and abetting and principal‑agent claims adequately pleaded against the Fixing Banks |
| Claims vs. UBS and unjust enrichment | UBS is a market‑maker but not a Fixing participant; plaintiffs allege parallel conduct | UBS: no role in the Fix calls, no plus factors linking it to conspiracy; unjust enrichment requires direct benefit at plaintiff’s expense | All claims against UBS dismissed; unjust enrichment dismissed as to all defendants for lack of direct relationship/evidenced benefit |
| Personal jurisdiction over LGMF | LGMF is alter‑ego of Fixing Banks (common ownership, control, purpose); jurisdiction permitted | Daimler and limitations on general jurisdiction, and insufficient alter‑ego allegations | Jurisdiction over LGMF upheld on alter‑ego theory at pleading stage (prima facie allegations sufficient) |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (conspiracy pleading requires facts sufficient to render agreement plausible)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleadings)
- Gelboim v. Bank of Am. Corp., 823 F.3d 759 (2d Cir. 2016) (banks’ manipulation of a benchmark can give rise to antitrust injury in derivative markets)
- Associated Gen. Contractors v. Cal. State Council of Carpenters, 459 U.S. 519 (1983) (antitrust standing framework)
- Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014) (proximate cause and limits on standing analysis)
- In re Amaranth Natural Gas Commodities Litig., 730 F.3d 170 (2d Cir. 2013) (standards for commodity‑market manipulation claims)
- In re Aluminum Warehousing Antitrust Litig., 833 F.3d 151 (2d Cir. 2016) (standing for plaintiffs in secondary markets when injuries are "inextricably intertwined")
- Anderson News L.L.C. v. Am. Media, Inc., 680 F.3d 162 (2d Cir. 2012) (plus‑factors and inference of agreement from parallel conduct)