Statement at the CFTC Public Meeting on Anti-Manipulation and Disruptive Trading Practices

Commissioner Bart Chilton

October 26, 2010

I take this opportunity to comment on the precious metals markets and in particular the silver markets.  More than two years ago, the agency began an investigation into silver markets.  I have been urging the agency to say something on the matter for months.  The public deserves some answers to their concerns that silver markets are being, and have been, manipulated.

The legal definition of manipulation under the law is a high bar to prove.  It is a much different test than what the average person might consider as manipulation.  Under existing law, to prove manipulation, the government is required to demonstrate not only specific intent, we also need to prove that as a result of the intent and market control, that activity caused an artificial price—a point which can certainly be debated by economists.  Attempted manipulation is less difficult to prove—requiring an intent to manipulate and some overt act in furtherance of that intent.  There are also other violations of law that could contort markets and distort prices.

I believe that there have been repeated attempts to influence prices in the silver markets.  There have been fraudulent efforts to persuade and deviously control that price.  Based on what I have been told by members of the public, and reviewed in publicly available documents, I believe violations to the Commodity Exchange Act (CEA) have taken place in silver markets and that any such violation of the law in this regard should be prosecuted.

In saying this, I am fully aware of the prohibition from divulging trader names or information about their positions.  I am extremely careful not to violate the law in this, or any, regard.  I also cannot pre-judge anything the agency may do with regard to our silver investigation, or any other matter.

The Wall Street Reform and Consumer Protection Act, which I strongly supported, contains new manipulation provisions as well as antidisruptive trading rules.  These new authorities, along with the implementation of thoughtful position limits in metals will go a long way toward ensuring more efficient and effective metals markets devoid of fraud, abuse, and manipulation.

Thoughtful investigations take time.  The CFTC staff has worked extremely hard on the silver investigation.  That said, there is a point at which it is our responsibility to say something. Within the law, I have done so.  I am hopeful that the agency will speak publicly about the investigation in the very near future and when they do so that it will be in a more granular fashion than I am permitted from doing at this time.

Last Updated: October 26, 2010