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Lawsuit Alleges Palladium, Platinum Prices Manipulated

Goldman Sachs, HSBC Holdings, Standard Bank and BASF Named in Suit Filed in New York

By Ira Iosebashvili
Nov. 26, 2014 3:26 p.m. ET
http://online.wsj.com/articles/lawsuit-alleges-palladium-platinum-prices-manipulated-1417033574

Goldman Sachs Group Inc., HSBC Holdings PLC, Standard Bank Group Ltd. , and German chemical maker BASF SE have been accused of manipulating platinum and palladium prices in a lawsuit filed in New York by a jeweler.

The four companies colluded since 2007 to manipulate the twice-daily price “fixes” for the metals, said lawyers for Modern Settings LLC, a jewelry and law enforcement badge-making company in Sarasota, Fla. The alleged price rigging allowed the four to enrich themselves at the expense of other market participants, the lawsuit said.

Goldman Sachs, HSBC, Standard Bank and BASF refused to comment on the lawsuit when contacted by The Wall Street Journal.

Modern Settings filed the suit as a class action on Tuesday in the U.S. District Court in Manhattan.

“We found preliminary evidence…that something nefarious was going on that could not be explained any way other than a conspiracy between these four entities,” said Gregory Asciolla, a partner at Labaton Sucharow LLP, the firm representing the plaintiffs.

Several global financial benchmarks have come under the spotlight in the wake of an interest-rate-rigging scandal involving the London interbank offered rate, or Libor. Authorities have launched investigations into possible manipulation of price-setting mechanisms in other markets spurring a broad move to overhaul benchmark processes.

In recent months, authorities in the U.K. and Switzerland have been reviewing the gold and silver fixes. Separately, in May, Barclays PLC was fined 26 million pounds ($41 million) by the U.K.’s Financial Conduct Authority after one of its traders manipulated the gold benchmark at the expense of a client.

In October, the London Metal Exchange won a bid to manage the platinum and palladium fixes, which are used world-wide by metal producers and consumers and in financial instruments such as exchange-traded funds. The LME, a unit of Hong Kong Exchanges & Clearing Ltd . , will use an electronic process to set the price fixes beginning in December.

Those changes “have come too late” for Modern Settings and other prospective class members, the complaint said. The complaint didn’t specify how much they were seeking in damages.

Platinum and palladium are used mainly in auto-exhaust filters, as well as in jewelry and dentistry.

Write to Ira Iosebashvili at [e-mail]

http://online.wsj.com/articles/lawsuit-alleges-palladium-platinum-prices-manipulated-1417033574