Judge says Blanchard case vs Barrick can go ahead

reuters ^ | September 9, 2003 | staff

[zacyak]

VANCOUVER, British Columbia , Sept 9 (Reuters) - A U.S. court has ruled that a case against Barrick Gold Corp. ABX.TO and J.P. Morgan Chase JPM.N alleging they conspired to manipulate the gold price can proceed to trial, court documents obtained on Tuesday show.

A Louisiana district court judge ruled last Wednesday that the antitrust case brought by New Orleans-based coin and bullion dealer, Blanchard & Co., against the world's third-biggest gold producer and the U.S. financial services giant can go ahead.

Blanchard alleged in a lawsuit filed in mid-December that Barrick and J.P. Morgan Chase made $2 billion in short-selling profits by suppressing the gold price at the expense of investors.

In making her order, Judge Helen Berrigan, denied motions by the Toronto-based miner and J.P. Morgan Chase to dismiss the lawsuit. They have 10 days to appeal her decision.

Barrick said it had not decided yet whether to appeal but contends that the case by Blanchard, which calls itself the U.S.'s largest retail dealer in rare coins and precious metals, is groundless.

"We believe their case is completely without merit and utterly ridiculous," said Barrick spokesman Vince Borg.

J.P. Morgan Chase declined to comment.

Blanchard alleges that Barrick's gold hedging program is a "purposeful and unlawful mechanism to manipulate the price of gold" and that it receives extraordinary favorable terms on certain sales contracts not available to competitors.

It alleges that J.P. Morgan Chase profits as it is the "largest holder of gold derivatives in the United States".

Barrick in January launched a counter libel suit against Blanchard and its chief executive, Donald W. Doyle Jr., in Canada for published remarks it said were defamatory. Borg said this case would continue in early October.

Blanchard has been backed in its suit by the Gold Anti-Trust Action Committee, a group that has said various bullion dealers are manipulating the gold market.

GATA three years ago launched a federal lawsuit alleging manipulation of the gold price. The case was dismissed in a Boston district court in March 2002.