Tags: HSBC | Goldman Sachs | metals | lawsuit

HSBC, Goldman Rigged Metals' Prices for Years, Lawsuit Claims

Tuesday, 25 Nov 2014 04:51 PM

Goldman Sachs Group Inc. and HSBC Holdings Plc were sued in New York over claims they conspired for eight years with two other companies to manipulate platinum and palladium prices in what plaintiffs’ lawyers say is the first class-action lawsuit of its kind in the U.S.

Standard Bank Group Ltd. and a metals unit of BASF SE, the world’s largest chemical company, were also sued. The four companies used inside information about client purchases and sale orders to profit from small movements in prices for the precious metals used in products ranging from jewelry to cars, according to a complaint filed Tuesday in Manhattan federal court.

The complaint, by Modern Settings LLC, a buyer of the metals, claims the companies “were privy to and shared confidential, non-public information about client purchase and sale orders that allowed them to glean information about the direction of platinum and palladium prices.”

Similar lawsuits have been filed this year in Manhattan accusing banks of rigging the benchmark price for gold. Authorities around the world are examining the gold market for signs of wrongdoing.

Regulators tightened scrutiny of benchmarks after uncovering price-rigging in interbank-loan rates and currencies. Silver became the first precious metal to change its traditional procedure in August, and Intercontinental Exchange Inc. will run a replacement for the 95-year-old London gold fixing. A new mechanism for platinum and palladium starts Dec. 1.

Conference Calls

According to the complaint, the four companies participated in twice-daily conference calls to set global price benchmarks for platinum and palladium, which also affected derivative products based on the precious metals.

“This unlawful behavior allowed defendants to reap substantial profits, while non-insiders, which include plaintiffs and members of the class, were injured,” lawyers for New York-based Modern Settings said in the filing.

Modern Settings needs a judge’s approval before it can represent other buyers of the metals.

The gross demand for platinum and palladium last year was more than 8 million ounces and more than 9.6 million ounces, respectively, according to the complaint. The biggest uses of the metals are for jewelery and producing catalytic converters that curb harmful emissions from vehicles, according to the complaint.

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Goldman Sachs Group and HSBC Holdings were sued in New York over claims they conspired for eight years with two other companies to manipulate platinum and palladium prices in what plaintiffs' lawyers say is the first class-action lawsuit of its kind.
HSBC, Goldman Sachs, metals, lawsuit
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2014-51-25
Tuesday, 25 Nov 2014 04:51 PM
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