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* Investors said silver prices driven down illegally
* HSBC had been previously dropped as a defendant
NEW YORK, March 27 (Reuters) - Silver investors failed toshow that JPMorgan Chase & Co conspired to drive downthe metal's price, and an antitrust lawsuit accusing the largestU.S. bank of price-fixing should be dismissed, a federal appealscourt ruled.
The 2nd U.S. Circuit Court of Appeals said the investors,who traded COMEX silver futures and options contracts, failed toshow that JPMorgan violated federal antitrust and commoditieslaws by having distorted silver prices at their expense between2007 and 2010.
Among the allegations were that the bank would amass hugeshort positions that market conditions did not justify, and make"fake" late-day trades when market volume was thin.
Thursday's order upheld a March 2013 ruling by U.S. DistrictJudge Robert Patterson, who also sits in Manhattan.
Christopher Lovell, a partner at Lovell Stewart HalebianJacobson representing the investors, did not immediately respondto requests for comment. JPMorgan spokesman Brian Marchionydeclined to comment.
Investors had filed at least 43 complaints in 2010 and 2011that accused banks of amassing hundreds of millions of dollarsin illegal profit through silver price-fixing.
After the lawsuits were consolidated, HSBC Holdings Plc was dropped from the case in September 2011, leavingNew York-based JPMorgan as the main defendant.
In Thursday's order, a three-judge 2nd Circuit panel said itcould not infer from allegations that JPMorgan took large and"uneconomic" short positions in silver that the bank intended tomanipulate prices, or conspired with floor brokers to do so.
"An inference of intent cannot be drawn from the mere factthat JPMorgan had a strong short position," the panel said.
The Commodity Futures Trading Commission began probingsilver price-fixing in 2008, and two years later proposedregulations to give it greater power to stop the practice.
The case is In re: Commodity Exchange Inc Silver Futures andOptions Trading Litigation, 2nd U.S. Circuit Court of Appeals,No. 13-1416. (Reporting by Jonathan Stempel in New York; editing by AndrewHay)
