Under Senate glare, Goldman rejects commodity manipulation

Thu Nov 20, 2014 7:26pm EST
 
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By Michael Flaherty and Josephine Mason

WASHINGTON/NEW YORK (Reuters) - Goldman Sachs Group Inc on Thursday took the lead in rejecting allegations by a U.S. Senate subcommittee that Wall Street banks were exploiting physical commodity markets to manipulate prices and gain unfair trading advantages.

In an often heated hearing before the Senate's Permanent Subcommittee on Investigations, Senator Carl Levin pressed bankers and executives on whether the company had inflated physical prices and curbed supplies of aluminum, adding billions of dollars in costs for consumers such as the U.S. Navy and beverage can makers.

Chris Wibbelman, president and chief executive of Metro International Trade Services LLC, the metals warehousing firm Goldman bought in 2010, defended his company's actions, saying it plays by the rules and contributes jobs to the Detroit area.

Levin, who chairs the subcommittee, directed many of his questions to Wibbelman and appeared frustrated at his testimony.

"Let me refresh your recollection," Levin said to Wibbelman in reference to a question about a business contract. After the Michigan Democrat read the document, he turned to the Metro CEO, raising his voice and said: "Does that help your recollection?"

The five-hour hearing followed the release on Wednesday of a detailed 403-page report that criticized how banks purchased and exploited huge commodity stockpiles.

The public airing of concerns about bank ownership of physical commodities and assets from pipelines to warehouses has renewed scrutiny of Wall Street's role in the market.

"This is clearly another case of putting banks on the defensive ...," said Michael Philipp, attorney and partner at Morgan Lewis's Investment Management and Securities Industry Practice in Chicago.   Continued...

 
The Goldman Sachs logo is displayed on a post above the floor of the New York Stock Exchange, September 11, 2013. REUTERS/Lucas Jackson