Barrick, J.P. Morgan face gold-fixing lawsuit

New Orleans-based Blanchard & Co., the largest retail dealer of gold coins and bullion in the U.S., filed an anti-trust lawsuit against Barrick Gold and investment bank J.P. Morgan Chase (JPM-N) on Wednesday.

The suit, filed on behalf of Blanchard’s clients who bought gold bullion, alleges that the two conspired to illegally manipulate the gold market since agreeing to collaborate in 1987. Blanchard claims that J.P. Morgan financially backed Barrick’s alleged short selling with “remarkably advantageous terms not available to others.”

Blanchard alleges that since 1987 the two poured millions of additional ounces of gold into the market allowing them to generate around US$2 billion in short-selling profits, “by suppressing the price of gold at the expense of individual investors.”

The coin dealer also claims that Barrick used private derivative contracts and off-balance sheet accounting to hide the addition of billions of dollars worth of gold.

Barrick has dismissed the allegations in a press release as, “ludicrous and totally without merit.”

The release went on to say that the suit, “contains numerous factual inaccuracies and defamatory statements.”

Barrick says it plans to, “vigorously defend the lawsuit and pursue all its legal rights and remedies.”

Barrick’s shares ended Wednesday session off 20 at $24.45 on Dec. 18, most of the other gold producers put in impressive gains on a higher gold price. Barrick shares were another 90 lower at $23.55 in mid-afternoon trade on Dec. 19.

J. P. Morgan ended Wednesday’s trade in New York US$1.02 lower at US$24; the shares were off another US49 in the afternoon on Thursday.

Blanchard is a privately held company.

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