Wall Street Journal, Bloomberg follow Chilton's silver manipulation statement

CFTC's Chilton Sees 'Fraudulent Efforts' to Control Silver Prices

By Sarah N. Lynch
The Wall Street Journal
Tuesday, October 26, 2010

http://online.wsj.com/article/SB1000142405270230334190457557620331005604...

WASHINGTON -- A federal futures regulator said on Tuesday he believes there have been numerous attempts to fraudulently influence silver market prices, and he urged the agency to prosecute those who may have violated commodities laws.

Bart Chilton, a commissioner at the Commodity Futures Trading Commission, made his comments at the start of a public meeting where the agency will be proposing new rules to strengthen its anti-fraud and anti-manipulation powers.

The agency's enforcement division for over two years now has been probing the silver market amid a flurry of complaints by investors who have raised fears about potential price manipulation. The CFTC hasn't provided any updates on the investigation, and Mr. Chilton said he thinks "the public deserves some answers to their concerns that silver markets are being, and have been, manipulated."

"I believe there have been repeated attempts to influence prices in the silver markets," he said. "There have been fraudulent efforts to persuade and deviously control that price."

He urged prosecution of those who may have violated the law, but said he can't prejudge what the agency will do with its investigation.

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Silver Market Faced 'Fraudulent Efforts' to Control Prices, Chilton Says

By Asjylyn Loder and Pham-Duy Nguyen
Bloomberg News
Tuesday, October 26, 2010

http://www.bloomberg.com/news/2010-10-26/silver-market-faced-fraudulent-...

The silver markets have been subject to "repeated attempts to influence prices," said Bart Chilton, one of five commissioners on the Commodity Futures Trading Commission, the top U.S. commodities regulator.

"There have been fraudulent efforts to persuade and deviously control that price," Chilton said in a statement released today, alleging there have been violations of the Commodity Exchange Act. "Any such violation of the law in this regard should be prosecuted," he said.

The commission began investigating allegations of price manipulation in the silver futures market in September 2008. Before today, silver gained 40 percent this year, touching $24.95 an ounce on Oct. 14, the highest level in 30 years.

"I don't believe there is any long-term conspiracy to control prices," said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois. "Manipulation can occur in small doses for very short periods of time. Adding regulation may not do the trick of correcting the problems simply because the players are smarter than the regulators and they'll find another way to game the system."

The agency spent five years investigating an effort by the Hunt brothers to corner the silver market in 1979 and 1980. That effort drove futures prices up from about $2 to as much as $50 per ounce before the commission forced the brothers to sell off their silver holdings and the price collapsed.

The law prevents him from divulging traders' names or information about their positions, Chilton said in the statement. The commission should release more information "in the very near future," he said.

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