Legal challenge starts for LME, Goldman on aluminum storage
By Veronica Brown and Josephine Mason
LONDON/NEW YORK (Reuters) - The London Metal Exchange and Goldman Sachs Group Inc. (GS.N: Quote) have been named as co-defendants in a U.S. class-action lawsuit alleging anticompetitive behavior in aluminum 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 aluminum 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 behavior in the warehousing market in connection with aluminum 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 aluminum.
"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. Continued...