Three banks accused of rigging silver prices

NEW YORK, July 29 (UPI) -- Three international banks were accused in a U.S. lawsuit of manipulating the daily benchmark price for silver.

A complaint filed in federal court by a Washington State resident, seeking class-action status, was filed against London's HSBC Holdings PLC, Deutsche Bank of Frankfurt, Germany, and the Bank of Nova Scotia, headquartered in Toronto. It alleges the banks established "positions in both physical silver and silver derivatives prior to the public release of silver fixing results, allowing them to reap large illegitimate profits."

Banks are currently under more scrutiny after some were found to manipulate, in 2012, the daily London Interbank Offered Rate, or Libor, which fixes the cost of borrowing. Earlier this year, the British bank Barclays PLC was fined $45 million after it admitted to influencing the daily spot price for gold in 2012.

The current system of setting the price of precious metals is over 100 years old and done in secret.

Critics have argued the system is antiquated, and prices should be determined more by forces of supply and demand.