Corruption at Its Finest: Goldman Sachs Settles for Rigging the Metals Market
Investment bank Goldman Sachs announced on Friday that it has reached an in-principle settlement agreement to resolve an outstanding class action lawsuit filed in 2014 related to the firm’s platinum and palladium trading.
Goldman was one of several defendants named in the lawsuit, which alleged they had conspired to manipulate a market benchmark for physical platinum and palladium prices.
The agreement is subject to final documentation and court approval, and the bank said that it had set aside reserves for its part of the settlement amount.
The price fixing lawsuit was initially filed nearly 10 years ago by Modern Settings LLC, a Florida-based manufacturer of jewelry and police badges. The filing accused units of Goldman, BASF, HSBC Holdings Plc and South Africa's Standard Bank Group Ltd of conspiring since 2007 to rig the twice-daily platinum and palladium benchmark ‘fixings’ and the prices of futures and options based on those rates.
The plaintiff's law firm, Labaton Sucharow, called it the first nationwide class action over alleged price-fixing of the metals and said that their client and other metals purchasers lost millions of dollars as a result of the scheme.
They accused the defendants of illegally sharing customer data, which they used to engage in ‘front-running’ of expected price moves, and also of manufacturing phantom ‘spoof’ orders.
Platinum and palladium are used in catalytic converters to curb vehicle emissions, and are also used in dentistry and jewelry.
When the allegations surfaced, the Hong Kong Exchanges and Clearing unit of the London Metal Exchange (LME) announced that they would take charge of platinum and palladium price benchmarking going forward, and would use a new electronic platform. The lawsuit claimed these changes came too late for Modern Settings and other class members.
The benchmark system run by Goldman, BASF, HSBC and Standard was established in 1989.
Spot platinum hit a high of $968.98 in early trading but has since declined to $955.72, while palladium has seen a run-up of $40 during Monday’s session, with the spot price holding above $980 per ounce at the time of writing.
This article originally appeared on Kitco News
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