The unprecedented rise and fall in silver's price during 1979 and 1980 resulted in charges against the Hunt brothers of Dallas of monopolization and market manipulation, charges which led to a lengthy trial. This book focuses on the economic analysis used at this trial. Drawing upon interviews with the judge, jury, attorneys and expert witnesses (the author having so served), it investigates the elusive definition of manipulation in sophisticated markets, the difficulties of interpreting statistical evidence, the imprecision in calculating damages, the hidden assumptions behind inferences concerning intent, and the hazards introduced when economic analysis enters complex litigation. The author concludes that these problems induce courtroom procedures to oversimplify the economic analysis and cause the law on market manipulation to be created retroactively. Yet the failure lies not with the legal institutions but with the futures exchanges who had not developed in advance the rules to minimize large-scale trading during the unusual price moves.
• First book to be published on a trial for manipulation of a commodities market • Draws upon interviews with the judge, jury, attorneys and expert witnesses • Will be of interest to a wide range of scholars and professions related to commodity and financial markets (especially so-called derivatives), securities and antitrust law
List of figures; List of tables; Preface; Foreword Thomas O. Gorman; 1. Why the Hunt silver case? 2. Turmoil in the silver market; 3. Identifying a manipulation; 4. Testing for the cause of the price rise in silver; 5. Determining the appropriate price of silver; 6. Inferring manipulative intent; 7. The predicament of economic analysis in the courtroom; Glossary of commodity market terms; References; Index.