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March 19, 2013

Failed Antitrust Suit over Alleged COMEX Market Manipulation Could Not Be Repleaded

By E. Darius Sturmer, J.D.

The federal district court in New York City refused to allow a putative class of individuals alleging antitrust injury from their transactions in COMEX silver futures and options contracts to amend their dismissed claims against J.P. Morgan Chase & Co. and its affiliates (In re Commodity Exchange, Inc. Silver Futures and Options Trading Litigation, March 15, 2013, Patterson, R.).

The plaintiffs' failure to state factual allegations adequate to render plausible the existence of a conspiracy to manipulate market prices during certain periods of 2007 and 2008 to 2010 would not have been cured by the proposed addition of additional details and facts or a monopolization claim, in the court's view. The plaintiffs' motion for leave to amend was, therefore, denied, and the action was dismissed.

The plaintiffs had "not alleged any factual allegations or authority to support their conclusion that J.P. Morgan either had monopoly power in the COMEX market or engaged in the willful acquisition of such monopoly power," according to the court. They offered no explanation of "how JPMorgan might have acted to control prices or to exclude other silver futures traders in the COMEX silver market" or what made J.P. Morgan's COMEX transactions "illegitimate or anticompetitive."

The court also noted that the plaintiffs failed to give any justification for adding a Section 2 claim "at this late stage in the litigation." The court saw no reason to deviate from the general rule that leave to amend "be denied when a motion to amend is 'filed solely in an attempt to prevent the Court from granting a motion to dismiss … particularly when the new claim could have been raised earlier.'"

In addition, the plaintiffs failed to show good cause as to why the court should grant them leave to file an amended Commodity Exchange Act (CEA) claim, in the court's view. The proposed allegations regarding J.P. Morgan's concentration of market positions, the futures market itself, and various price fluctuations during the relevant time period would still have been insufficient to establish a CEA claim.

The case is No. 11 Md. 02213 (RPP).

Attorneys: Hollis L. Salzman (Robins, Kaplan, Miller & Ciresi, LLP) for Brian J. Beatty. Amanda Flug Davidoff (Sullivan & Cromwell LLP) for J.P. Morgan Chase & Co. Michael R. Lazerwitz (Cleary Gottlieb Steen & Hamilton, LLP) for HSBC Holdings plc. Cadio Zirpoli (Saveri & Saveri Inc.) for Nicholis Repke

Companies: J.P. Morgan Chase & Co.

MainStory: TopStory Antitrust NewYorkNews

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