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Banks face scrutiny over pricing of precious metals: WSJ

Gold is poured into a mould during processing at the PT Antam Tbk. precious metal refinery in Jakarta January 15, 2009. REUTERS/Beawiharta

(Reuters) - The U.S. Department of Justice (DoJ) and the Commodity Futures Trading Commission are investigating at least 10 major banks for possible rigging of precious-metals markets, the Wall Street Journal reported, citing people close to the inquiries.

DoJ prosecutors are scrutinizing the price-setting process for gold, silver, platinum and palladium in London, while the CFTC has opened a civil investigation, the newspaper said.

The banks are HSBC Holdings Plc, Bank of Nova Scotia, Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc, JPMorgan Chase & Co, Societe Generale, Standard Bank Group Ltd and UBS Group AG, the Journal said.

Standard Bank spokesman Erik Larsen declined to comment on the report. The other banks, the DoJ and CFTC did not immediately respond to requests for comment.

The CFTC issued a subpoena to HSBC Bank USA in January seeking documents related to the bank's precious metals trading operations, HSBC said on Monday.

The DoJ also issued a request to HSBC Holdings in November seeking documents related to a criminal antitrust investigation it is conducting in relation to precious metals, HSBC said.

Precious metal benchmarks have come under increased regulatory scrutiny since a scandal broke in 2012 over manipulation of Libor interest rates.

HSBC was one of several banks named in lawsuits filed in U.S. courts last year alleging a conspiracy to manipulate gold, silver, platinum and palladium prices, as well as precious metals derivatives, during the daily precious metals fixes.

The century-old gold fix is a standard price for the metal that banks set twice a day over the phone. Some gold traders claim they were harmed by a scheme to manipulate the fix.

The banks operating the precious metals benchmarks, known as the fixes, said last year they would no longer administer that process.

An electronic daily silver price benchmark is now administered by Thomson Reuters and CME Group, while the London Metal Exchange provides twice-daily benchmark platinum and palladium prices.

ICE Benchmark Administration will run an electronic gold price benchmark from March 20 to replace the London gold fix.

Switzerland's financial watchdog said in November it had found a "clear attempt" to manipulate precious metals price benchmarks.

An investigation by German regulator Bafin found no signs of attempted benchmark price manipulation in precious metals, newspaper Handelsblatt reported last month.

(Reporting by Supriya Kurane in Bengaluru; Editing by Anupama Dwivedi and Ted Kerr)