RiskFinancial CrimeGoldman Sachs and LME Sued over Aluminium Warehousing

Goldman Sachs and LME Sued over Aluminium Warehousing

The London Metal Exchange (LME) and Goldman Sachs Group are named as co-defendants in a US class action lawsuit over practices in the warehousing of aluminium that pushed up the price of the metal.

According to Hong Kong Exchanges and Clearing (HKEx), its parent, the LME is accused by US metals manufacturer Superior Extrusion as lead plaintiff in the lawsuit of “anticompetitive and monopolistic behaviour in the warehousing market in connection with aluminium price”.

The LME and Goldman have denied the allegations. “We believe this suit is without merit and we intend to vigorously contest it,” a Goldman Sachs spokesman said. “I would also note that aluminium prices are down 40% from their peak in 2006.”

The lawsuit comes as regulators including the US Commodity Futures Trading Commission (CFTC) and London’s Financial Conduct Authority (FCA) consider starting formal inquiries into allegations that the commodity markets have been manipulated by metal warehouse owners hoarding aluminium to inflate the price. The US Department of Justice (DoJ) has also commenced a preliminary investigation into the metals warehousing industry.

Last week Goldman attempted to respond to complaints of long waiting times and inflated prices at metals warehouses worldwide, by offering immediate access to aluminium for end users holding metal at its Metro warehouses.

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