Brokerages Going to Trial With Hunts in Silver Case

A federal judge refused Tuesday to drop Prudential-Bache Securities, Merrill Lynch & Co. and three other defendants from a multimillion-dollar civil lawsuit charging that they conspired with the Hunt brothers to manipulate the world silver market.

“I conclude that the record contains sufficient evidence from which a reasonable jury could find these five defendants participated in a conspiracy to manipulate silver prices,” U.S. District Judge Morris E. Lasker ruled.

Lasker’s 38-page decision paves the way for a jury trial Feb. 3 in Manhattan on a class-action civil suit brought by Minpeco SA, a mineral concern owned by the Peruvian government, and other investors.

The case alleges that Nelson Bunker Hunt and his brother, William Herbert Hunt, conspired with silver futures traders and the brokerage houses that handled their accounts to manipulate the price of silver and silver futures.

Minpeco, the main plaintiff, is trying to recoup $100 million in out-of-pocket losses and another $100 million in estimated lost profit from the silver market’s collapse on March 27, 1980.

The lawsuit, which accuses the alleged conspirators of violating the Sherman Antitrust Act and civil provisions of the Racketeer Influenced and Corrupt Organizations Act, would entitle Minpeco to seek treble damages, or $600 million, if the jury were to decide in its favor.

The federal Commodity Futures Trading Commission, which is holding hearings in Washington, has contended that the Hunt brothers and others bought more than 100 million ounces of silver bullion on U.S. and European markets between September, 1979, and March, 1980.

That caused artificially high silver prices, which peaked at more than $50 an ounce in January, 1980, the complaint says.

The commission hearing is one of several legal proceedings involving the 1980 collapse of the silver market. The Hunts face up to $80 million in fines and damages and a ban on future commodities trading if they are found guilty in that case.

In the New York suit, Minpeco alleges that a conspiracy led by the two brothers, supported by two groups of wealthy investors, including their brother, Lamar Hunt, and “knowingly assisted” by the brokerage firms, caused a dramatic rise in silver prices from August, 1979, to January, 1980.

In addition to the brokerages, the three defendants affected by Lasker’s decision include ACLI International Commodity Services Inc., and two silver traders, Lamar Hunt and Mahmoud Fustok.