Legal challenge starts for LME, Goldman on aluminium storage
LONDON/NEW YORK (Reuters) - The London Metal Exchange and Goldman Sachs Group Inc. (GS.N) have been named as co-defendants in a U.S. class-action lawsuit alleging anticompetitive behaviour in aluminium warehousing, Hong Kong Exchanges and Clearing Limited 0.388.HK (HKEx) said.
Goldman on Wednesday tried to diffuse years of frustration over long waiting times and inflated prices at metals warehouses across the world, by offering immediate access to aluminium for end users holding metal at its Metro warehouses.
Criticism of banks that own commodity assets and trade raw materials has ratcheted up in recent weeks, with the U.S. Department of Justice starting a preliminary probe into the metals warehousing industry, sources said.
Britain's financial watchdog is also investigating the LME's warehousing system.
The lawsuit alleges "anticompetitive and monopolistic behaviour in the warehousing market in connection with aluminium prices", LME owner HKEx said in a statement on Sunday.
The lead plaintiff in the lawsuit, filed on August 1 in the U.S. District Court for the Eastern District of Michigan, is Superior Extrusion, Inc - an end user of aluminium.
"LME management's initial assessment is that the suit is without merit and LME will contest it vigorously," HKEx said.
Customers and U.S. lawmakers have accused Goldman and other warehouse owners of artificially inflating waiting times to boost rents for warehouse owners and lift metal prices.
"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 percent from their peak in 2006," he said.
Goldman President Gary Cohn told CNBC television on Wednesday that no consumers had stepped forward to take up the offer.
London Metal Exchange aluminium for three months delivery closed on Friday at $1,809 per tonne.
Warehouse owners and outgoing LME CEO Martin Abbott have said complaints over long lines are unjustified, arguing there is no shortage of metal.
(The story has been filed again to correct the year to 2006 in the Goldman spokesman's quote.)
(Editing by Louise Ireland)
- Tweet this
- Share this
- Digg this
- Hague court orders Russia to pay $50 billion in Yukos case
- Gaza fighting flares, Netanyahu and U.N. chief spar on truce terms |
- Russia, Germany up diplomatic battle over Ukraine sanctions
- Pushing locals aside, Russians take top rebel posts in east Ukraine
- Ukraine claims more territory as fight intensifies with rebels