In new warehousing suit, Goldman, JPMorgan sued over zinc

Fri May 23, 2014 11:13pm EDT
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By Andrew Longstreth and Josephine Mason

NEW YORK (Reuters) - Wall Street banks, big metal merchants and the London Metal Exchange face a lawsuit alleging they have artificially inflated zinc prices, expanding a high-profile legal case that has until now centered on the larger aluminum market.

In a filing on Friday, Duncan Galvanizing, one of the oldest galvanizers in the United States, accused Goldman Sachs Group Inc (GS.N: Quote), JPMorgan Chase & Co (JPM.N: Quote), the LME and metal warehouse operators of conspiring since 2010 to manipulate the U.S. zinc price.

The suit, registered in the Southern District of New York, is the first to include allegations over the impact of warehousing on the smaller, niche zinc market. Zinc is used to coat steel to protect against corrosion.

The lawsuit names as defendants the mining and commodities trading group Glencore Xstrata (GLEN.L: Quote) and its Pacorini Metals USA LLC unit. Metro International Trade Services, the metal warehousing of Goldman Sachs, is also named a defendant.

The lawsuit, which seeks class action status, echoes the allegations made in 26 suits that have been consolidated into a class-action suits over alleged price fixing of the aluminum market in the United States.

JPMorgan and Glencore declined to comment on the lawsuit. A spokesman for Goldman Sachs said it intended to "vigorously contest the suit."

LME did not respond to a request for comment.

Frustration over long waiting times and inflated prices at metals warehouses across the world has led to growing criticism of banks that own commodity assets and trade raw materials and has captured regulatory and public attention in the United States.   Continued...

A view of the Goldman Sachs stall on the floor of the New York Stock Exchange July 16, 2013. REUTERS/Brendan McDermid