Exclusive: Goldman, JPMorgan in Senate's crosshairs for commodities holdings

Fri Aug 8, 2014 5:29am EDT
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By Patrick Rucker

WASHINGTON (Reuters) - U.S. Senator Carl Levin is preparing a last push to bring Wall Street's big commodity traders to heel during his final months in office, wrapping up a nearly two year-long probe that could potentially reveal abuses in energy and metals markets.

Levin's investigators have met with representatives from Goldman Sachs (GS.N: Quote) and JPMorgan Chase (JPM.N: Quote) in recent weeks, according to sources familiar with the matter.

Executives from those companies may appear at a hearing as early as September, during which Levin's Permanent Subcommittee on Investigations would present the findings of the probe, the sources said.

Spokesmen for Goldman and JPMorgan declined to comment.

Specifically, Senate investigators have explored whether Wall Street has abused its commodities holdings at the expense of clients, consumers, the environment or the health of the market, according to the people familiar with the probe.

The probe's findings and the possible hearing will add to the scrutiny Wall Street firms have already faced from the Federal Reserve and from other lawmakers over whether it is appropriate for banks to maintain vast holdings in metals warehouses and other physical commodities businesses.

Companies including MillerCoors LLC and The Coca-Cola Co (KO.N: Quote), for example, have accused warehouses and their owners of distorting supplies, inflating the prices of aluminum, and costing consumers billions of extra dollars annually.

Wall Street has found it lucrative to have a hand in both the trading and delivery of commodities but some investment banks have retreated from parts of the businesses as they have become the focus of lawsuits, regulatory scrutiny and public outrage.   Continued...

U.S. Senator Carl Levin (D-MI) departs following the weekly Democratic caucus policy luncheon at the U.S. Capitol in Washington June 24, 2014. REUTERS/Jonathan Ernst