Sachs Group Inc., two of its subsidiaries and the London Metal
Exchange have been slapped with another antitrust lawsuit
alleging that they conspired to boost wait times for aluminum
and to manipulate metal prices and premiums.
Miami-based door and
glass enclosure manufacturer Peterson Industries Inc. contends
that Goldman Sachs, following its acquisition of warehousing
company Metro International Trade Services LLC in 2010, also
took advantage of LME rules to boost daily rental fees and
profits, according to a class-action complaint filed Sept. 20
in federal court in U.S. District Court for the Southern
District of New York.
"Since Goldman Sachs
entered the warehouse business, the time it takes buyers to get
metal from the warehouses has ballooned to more than 16 months,
up from six weeks," Peterson said in the complaint. "This was
Goldman Sachs design. The longer the metal sits in its
warehouses, the more rent Goldman Sachs earns from aluminum
Metro rents in Detroit
rose from 42 cents a day in 2011 to 48 cents per tonne in July
2013 as LME warehouses morphed from a market of "last resort"
into a market of "first resort," Peterson said. The result was
the creation of two markets, an LME storage market with as much
as 80-percent of metal locked into financing deals and an
alternate physical market characterized by high premiums, the
The LME declined to
comment on the complaint.
Goldman Sachs said it
would defend itself against the lawsuit. "We believe this suit,
like the other substantively identical ones, is without merit
and we intend to vigorously contest it. We also note that
aluminum prices are down 40 percent from their peak in 2006," a
spokesman for the New York-based bank said Sept. 27 in an
e-mail to AMM.
Goldman and the LME
are facing at least seven similar lawsuits
(amm.com, Aug. 19,
Peterson, in its
complaint, countered that the bank is "conveniently neglecting
that the cost of aluminum relative to the LME trading prices
drastically increased" following Goldman subsidiary GS Power
Holding LLCs acquisition of Metro.
The Peterson complaint
also lists as "co-conspirators"but not as
defendantsJPMorgan Chase & Co., New York; Glencore
Xstrata Plc, Baar, Switzerland; and Trafigura Beheer BV,
Glencore and Trafigura
declined to comment. JPMorgan did not respond to a request for
comment, but has said it is considering a sale of its physical
commodities business (amm.com, July 26).
president Bruce Cynamon referred a request for comment to the
attorney who filed the case. Robbins Geller Rudman & Dowd
LLP attorney Samuel Howard Rudman did not reply to a request
for comment Sept. 27.