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Ronan Manly

Ronan Manly

Ronan Manly is a precious metals analyst with BullionStar whose blogs
often cover current themes including what's going on in the
London gold market and the gold activities of central banks.

Deutsche Trader & Gold Fix Director Under DoJ Prosecution

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  • Author Ronan Manly
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‘Beginning in at least May 2008 and continuing through at least July 2013 (the “Relevant Period”), Defendants James Vorley (“Vorley”) and Cedric Chanu (“Chanu”) engaged in a manipulative and deceptive scheme (the “Scheme”) while placing orders and trading in the precious metals futures markets on a registered entity.’

So begins the civil enforcement action filed by the Commodity Futures Trading Commission (CFTC) on 26 January 2018 against two former Deutsche Bank precious metals traders James Vorley and Cedric Chanu. During their trading careers at Deutsche, Vorley was employed by Deutsche Bank in London and Chanu by Deutsche Bank in Singapore.

According to the UK’s FSA Register, James Vorley performed regulated activities (i.e. trading) at Deutsche Bank London between June 2007 and November 2014. Before that, Vorley was employed in a similar role at the Bank of Nova Scotia between December 2001 and April 2007.

According to the CFTC complaint

Vorley and Chanu repeatedly engaged in manipulative or deceptive acts and practices by spoofing (bidding or offering with the intent to cancel the bid or offer before execution). 

On numerous occasions,  Vorley and/or Chanu placed orders for COMEX gold, silver, platinum or palladium futures contracts that they wanted to get filled (Genuine Order) and entered orders for the same contract on the opposite side of the market that they intended to cancel before execution (Spoof Order).

The CFTC complaint continues:

“Vorley and Chanu also engaged in spoofing in coordination with other traders on the precious metals desk and taught another trader on the desk how to spoof.

This other trader that they tutored is David Liew, also of Deutsche Bank in Singapore, who has now turned prosecution witness for the US Department of Justice (DoJ) and Federal Bureau of Investigations (FBI) – see below.

United States v. James Vorley (Court Docket Number: 1:18-cr-00035-1)

Department of Justice – Criminal Charges

Following the CFTC charges in January 2018, the US DoJ and FBI then charged the same James Vorley and Cedric Chanu in a separate criminal indictment on 25 July 2018, “with one count of conspiracy to commit wire fraud affecting a financial institution and one count of wire fraud affecting a financial institution.

This DoJ indictmentalleges that Vorley and Chanu, who were employed as traders at Deutsche Bank  AG engaged in a years-long conspiracy to defraud other traders on the Commodity Exchange Inc. (COMEX), which was an exchange run by the Chicago Mercantile Exchange Group (CME Group).”   

According to the DoJ indictment, Vorley “worked from in or around May 2007 until in or around March 2015 as a trader at Deutsche Bank AG, where he traded precious metals futures contracts. VORLEY was based in London, United Kingdom”.

As well as devising a scheme to defraud other market participants, the DoJ alleges that Vorley transmitted wire communications to the COMEX from outside the US for the purpose of executing the scheme (i.e. sent fraudulent futures orders from London to the COMEX). In addition to Vorley and Chanu, the DoJ indictment also lists Deutsche Bank’s David Liew as a defendant, albeit a minor defendant as he turned prosecution witness.

Note that when the US government brought the criminal indictment and charge against Vorley and Chanu, this put the CFTC action on hold, which in legal language is described as the Department of Justice moving to stay the civil case due to the parallel criminal prosecution. This is done so that the defendants “cannot use civil discovery process to circumvent the limitations on criminal discovery”.

Fast forward to August this year, and Chicago federal judge John Tharp recently ruled that Vorley and Chanu can be prosecuted for ‘spoofing’ under the wire fraud statute. This then allowed the DoJ criminal case against Vorley and Chanu to proceed.

Fast forward to today and the case is now proceeding with a jury in United States District court (Northern district) of Illinois, titled United States v. James Vorley (Court Docket Number: 1:18-cr-00035-1), which is why you may have seen Deutsche and James Vorley in the financial news right now. Even the high-speed electronic trading firms of Citadel and Quantlab are getting in on this high-profile trial, testifying this week against Vorley and Chanu. 

And because of the fact that the third Deutsche Bank trader David Liew has moved to be a prosecution witness, the evidence against Vorley and Chanu of manipulating gold and silver prices is more revealing than it would otherwise have been. Liew this week in court told the jury that it was his very bosses Vorley and Chanu who had taught him how to manipulate precious metals prices, when he “sat next to Chanu in Singapore from 2009 to 2012 and communicated daily on a live video chat with Vorley in London.

This, as a reminder is the same James Vorley who was profiled in a guest article by Allan Flynn on BullionStar’s website in April 2018 titled ‘US Gold and Silver Futures Markets – “Easy Targets"’ in which we learned from court documents that Vorley used terms such as ‘spoof it up’ and ‘jam it’ to refer to his illegal trades, and in one instance in a November 2010 recorded chat after Vorley assisted Liew by spoofing trades, Vorley referred to the manipulation as was classic [/ jam it / woooooooooooo…bif it up“, to which Liew replied with the glowing tribute to Vorley of “tricks from the . . . master.

The Fix is in- The London Gold and Silver Fixings 

The Punchline – Mr Fixer

For a manipulation trial that is so high-profile and newsworthy, its surprising that one critical point about Deutsche’s Bank’s precious metals trader James Vorley has escaped media attention up to now, a point so important that the London Bullion Market Association (LBMA) and its Board must have been praying that no one would notice.

And that point is..…drumroll…that the same James Vorley now being prosecuted by the US Department of Justice /  CFTC for gold and silver price manipulation COMEX over the period from at least May 2008 until July 2013, was, during the same time as his alleged COMEX manipulations, a director of both the daily London Gold Fixing and daily London Silver Fixing. How this point has escaped mainstream media attention is mind-boggling, but then again, maybe not if you are the MSM, whose jobs depend on not noticing these things.

To spell it out another way, for more than four and a half years from 2009 until 2014, during the same exact same time period as the US Department of Justice is accusing James Vorley of having been “engaged in a years-long conspiracy to defraud other traders on COMEX" by “on numerous occasions, placing Spoofing Orders for COMEX gold, silver, platinum or palladium futures contracts", James Vorley was a director of the LBMA’s London Gold Fixing and London Silver Fixing companies.

Specifically, James Owen Vorley, to give him his full name, was one of the two Deutsche Bank directors of The London Gold Market Fixing Limited and The London Silver Market Fixing Limited from 2009 to 2014, appointed to both companies on 9 September 2009, resigning from the Gold Fixing company on 13 May 2014 and resigning from the Silver Fixing company on 22 May 2014.

The appointment documents of James Vorley to the Fixing companies can be seen here, signed off by Simon Weeks who was head of precious metals for The Bank of Nova Scotia.

Vorley – The London Gold Market Fixing Limited

Vorley – The London Silver Market Fixing Limited

Note that the directors of the London Gold and Silver Fixings were the same seniors traders from the Fixing members trading desks who took part in the daily gold and silver fixing auctions each and every day, setting the benchmark price for gold and silver around the world, a benchmark which was and is still used as a reference rate by trillions of dollars worth of OTC bullion transactions, ETF’s, swaps, and other precious metals transactions.

For those who may not be familiar, the Gold Fixing is now known as the LBMA Gold Price, while the Silver Fixing is now known as the LBMA Silver Price. Indeed, it was only a year ago that the LBMA celebrated the centenary of the London Gold Fixing at Rothschild’s offices in the City of London, calling it a momentous occasion but not surprisingly, no mention of the Gold Fixing alumni of directors spoofing COMEX gold futures price.

Note that Deutsche Bank was one of three banks in the London Silver Fixing along with HSBC and Scotia, and one of five banks in the Gold Fixing along with HSBC, Scotia, Barclays and SocGen, until Deutsche announced in January 2014 that it would exit both processes following UK (FCA) and German (BaFin) regulatory investigations into the Fixings. Deutsche Bank then pulled out of the London Gold Fixing in May 2014 and London Silver Fixing in August 2014.

The other Deutsche Bank director of the Gold and Silver Fixings at that time was Matthew Keen, also appointed on 9 September 2009. Deutsche’s Keen abruptly resigned from the Gold and Silver Fixing companies on 20 January 2014. This was also the period in which the following characters were the directors of the Gold Fixing – Vincent Domien and Xavier Lannegrace, of SocGen, David Rose and Peter Drabwell of HSBC, Simon Weeks and Steven Lowe of Scotia, Jonathan Spall and Martyn Whitehead of BarCap, and of course James Vorley and Matthew Keen of Deutsche Bank.

Somehow, Vorley managed to slip through the cracks and avoid being profiled in ZeroHedge’s classic May 2014 article “From Rothschild To Koch Industries: Meet The People Who “Fix" The Price Of Gold“. However, this time around he is not so lucky, and is currently facing a grand jury in Chicago. How the LBMA will react to this is anyone’s guess, but LBMA reactions are typically to bury their collective head in the sand and hope the mainstream financial media will not notice. 

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