U.S. hedge fund metal manipulation case dismissed

* Moore Capital, MF Global, ex-trader Pia win dismissal

* Plaintiff investors expect to replead case

* Pia's alleged trades said to involve "banging the close"

By Jonathan Stempel

NEW YORK, Sept 13 (Reuters) - Moore Capital Management LP, a hedge fund firm that paid a $25 million regulatory fine to settle market manipulation claims, won on Tuesday the dismissal of a lawsuit by investors who said they lost money because of illegal activity.

Two co-defendants, former veteran Moore trader Christopher Pia and the brokerage MF Global Ltd MF.N, also won the dismissal of claims that they conspired with Moore to fix prices on platinum and palladium futures contracts from Oct. 25, 2007 to June 6, 2008, violating antitrust and racketeering laws.

U.S. District Judge William Pauley in Manhattan nonetheless said the eight plaintiffs may replead their case, without relying on Moore's April 2010 settlement with the Commodity Futures Trading Commission to show that firm's wrongdoing.

Moore was founded by Louis Moore Bacon, whose net worth in March was $1.7 billion according to Forbes magazine. Based in New York, it is considered one of the largest and most consistently profitable hedge fund firms.

The settlement resolved claims over Pia's alleged efforts in the last 10 seconds of trading days to enter large trades in "illiquid" platinum and palladium markets that pushed prices higher, a strategy known as "banging the close."

Pia in July agreed to his own $1 million civil fine with the CFTC. Neither he nor Moore admitted wrongdoing.

Pauley said the investors, who sought class-action status, could not rely on the CFTC accord with Moore to show liability because it was a product of settlement negotiations rather than a determination of factual issues.

Nevertheless, he said the investors could raise some of their claims in a revised complaint, including that Moore and MF Global could be held responsible for Pia's trades.

Christopher Lovell, a lawyer for some of the plaintiffs, called Pauley's ruling "a good opinion that recognizes that the allegations concerning trades made by Mr. Pia on behalf of the other defendants may suffice to establish liability."

Both Lovell and Christopher Gray, who represents the other plaintiffs, said their clients plan to replead their cases.

A Moore spokesman declined to comment. Lawyers for Pia and MF Global did not immediately respond to requests for comment.

The case is In re: Platinum and Palladium Commodities Litigation, U.S. District Court, Southern District of New York, No. 10-03617. (Reporting by Jonathan Stempel, editing by Gerald E. McCormick)