05 August 2012

CFTC Said to "Drop" Four Year Investigation Into Silver Just Before Promised Release

CFTC To Investing Public: 'Drop Dead.'

This leak to the FT *could* just be a 'trial balloon' by Mr. Gensler and his crew to see if they can get away with it. But that seems more like the plot of a novel.

This could be one of the best examples of the credibility trap in action. The government regulators can say nothing because of their government's long complicity.

If the CFTC in fact does 'drop' the investigation without presenting findings, one could consider that a slap in the face of the American public which on the whole asked for the investigation to be done in the first place, by the regulators who purportedly are hired and paid to serve their interests.

Given the recent admissions about widespread manipulation in LIBOR, the timing of this outcome to the CFTC invesigation could hardly be more arrogant and high-handed, and designed to put the investing public in their places.  It will certainly not inspire any confidence in the integrity of the markets and their regulation.

It would probably be unwise for the investing public to accept this outcome without presenting some consequences.

I suggest that a mass cancelling of futures trading accounts and the withdrawal of all funds deposited there might be a step in the right direction.

Given the serial criminality that has been exhibited in the US futures markets, that action might be long overdue on the basis of common sense.

Financial Times
Four-year silver probe set to be dropped
By Jack Farchy in London and Gregory Meyer in New York
August 5, 2012 10:00 pm

A four-year investigation into the possible manipulation of the the silver market looks increasingly likely to be dropped after US regulators failed to find enough evidence to support a legal case, according to three people familiar with the situation.

The Commodity Futures Trading Commission first announced that it was investigating “complaints of misconduct in the silver market” in September 2008, following a barrage of allegations of manipulation from a group of precious metals investors.

In 2010, Bart Chilton, a CFTC commissioner, said that he believed there had been “fraudulent efforts” to “deviously control” the silver price.

But after taking advice from two external consultancies, the first of which found irregularities on certain trading dates that it believed deserved more analysis, CFTC staff do not have sufficient evidence to bring a case, according to the people familiar with the situation...

Read the rest here.