COMEX and Gold Bullion ETF Manipulation, Bill Murphy Grounds for a Class Action Law Suit
Commodities / Gold & Silver 2009 Jul 12, 2009 - 05:41 AM GMTBy: Brian_Bloom
Dear Bill,
The recent article by Adrian Douglas, if true, evidences outrageously unacceptable behavior on the part of all three of the COMEX – which appears to be cheating on its contractual obligations to act as a clearing house – the investment banks which are selling short and have no intention or ability to deliver physical gold as and when deliver falls due and those ETFs which do not have 100% gold backing.
As I understand it, the very purpose of an ETF is to allow private individuals to own gold without the need to address the logistical issues of storage and delivery. Failure of an ETF to honor such a commitment would constitute breach of contract. Further, in Australia we have a law known as the Trade Practices Act. That Act contains a clause which specifically prohibits “misleading and deceptive conduct”.
I imagine that the USA has a similar law. Arguably, even if an ETF’s Prospectus states that it will not have 100% backing of gold, it would need to demonstrate precisely why it was formed in the first place and it would need to demonstrate that it was honoring whatever commitments it had made – both express and implied. For example:
Why would anyone in his right mind buy shares in a gold ETF if he/she knew a priori that that ETF had no intention of being a custodian of gold? Regardless of what its Prospectus says, would not a “reasonable man” have some minimum expectations that investment in a Gold ETF would be a proxy for investing in gold as opposed to a piece of paper that purports to represent gold?
It seems to me that someone needs to act to put a stop to this disrespectful attitude to the law of contract in particular and the rule of law in general. It seems to me that, if Adrian Douglas is correct, this behavior on the part of both COMEX and the ETFs is grounds for a Class Action Law suit. The plaintiffs might constitute any/all shareholders in ETFs which are behaving this way; and all aggrieved participants in the gold futures markets on COMEX. (The meaning of “aggrieved” is open to interpretation.) The defendants would be those ETFs which are guilty of misleading and deceptive conduct, those ETFs which are demonstrably dishonoring their contractual obligations, the COMEX and those organizations which are selling gold short on COMEX and failing to deliver physical gold as and when they are called upon to do so (probably the large investment banks); and all the directors of these organizations in their personal capacities
I am not a lawyer, but this seems to me to be a slam dunk lawsuit – if Adrian Douglas is correct.
My understanding is that the primary purpose of the Gold Anti Trust Action Committee is to expose and put a stop to the manipulation of the gold markets. Well, is the evidence sufficient to allow GATA to orchestrate as Class Action? Such a Class Action will put a stop to this behavior once and for all.
Yours Sincerely
Brian Bloom
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