A complaint filed Friday in the United States District Court for the Southern District of New York alleges price manipulation in the markets for platinum and palladium products. Platinum and palladium are primarily found in the production of catalytic converters for automobiles and in jewelry.
Goldman Scarlato & Penny filed the nationwide class action on behalf of persons who 1) traded or held physical platinum or palladium, or 2) platinum or palladium derivative products that were settled or marked-to-market at the Platinum and Palladium Fixings benchmark, or 3) NYMEX platinum and palladium futures and options contracts.
The named defendants are BASF Metals Limited, a subsidiary of BASF; Goldman Sachs International, a subsidiary of The Goldman Sachs Group, Inc.; HSBC Bank USA, N.A., a subsidiary of HSBC Holdings Plc; and, Standard Bank Plc, a subsidiary of Standard Bank Group Limited.
The Plaintiff’s class action complaint alleges the defendants conspired to manipulate and rig the global benchmarks for physical platinum and palladium prices, the “Platinum and Palladium Fixings,” and the prices of platinum-based and palladium-based financial derivative products. The alleged collusion began in 2007, nearly eight years ago.
According to the class action complaint, “(t)he Platinum and Palladium Fixings are set via teleconference twice a day, and the only participants during these teleconferences are Defendants BASF, Goldman Sachs, HSBC, and Standard Bank. Through this process, the prices for the global physical platinum and palladium markets are set or ‘fixed,’ which in turn, directly impacts the prices of platinum- and palladium-based financial products, like platinum and palladium futures and options, because these instruments are inextricably linked to the prices of the physical platinum and palladium underlying these derivatives contracts.”
A U.K. company headquartered in London, England, The London Platinum and Palladium Fixing Company Ltd. (“LPPFC”) was identified in the complaint as an agent or co-conspirator but was not named as a defendant. According to the complaint, LPPFC administered and published the Platinum and Palladium Fixings. On October 16, 2014, the LPPFC removed itself from its responsibilities of administering the Platinum and Palladium Fixings and appointed the London Metal Exchange (“LME”) as the new administrator of the supposedly revamped global price-setting process for platinum and palladium.
The complaint alleges that the defendants and their co-conspirators were privy to and shared confidential, nonpublic information about client purchase and sale orders that allowed them to glean information about the direction of platinum and palladium prices, and consequently, gave them the ability to execute trades in physical platinum and palladium and platinum- and palladium-based financial products in advance of those movements.
Members of the Class transacted in physical platinum and palladium and/or platinum- and palladium-based financial products, including platinum and palladium futures and options traded on the New York Mercantile Exchange (“NYMEX”). Plaintiff and members of the Class lost value on tens of thousands of transactions involving physical platinum and palladium and platinum- and palladium- based financial products because of Defendants’ unlawful conduct.
The U.S. Commodity Futures Trading Commission and the U.K. Financial Conduct Authority (are currently investigating manipulation of gold prices, which, like platinum and palladium, are set daily in a similar process.
In light of increased regulatory scrutiny of precious metals markets and commodity-related benchmarks generally, the Platinum and Palladium Fixings have recently undergone a significant overhaul. The price-setting process for platinum and palladium supposedly has been revamped, including replacing the LPPFC with the LME to run the new pricing system for physical platinum and palladium. However, those changes came too late for Plaintiff and members of the proposed class.
About Goldman Scarlato & Penny, P.C.
Goldman Scarlato & Penny, P.C. prosecutes antitrust class actions and represents consumers and small businesses pursing price-fixing claims and claims of anti-competitive conduct. To learn more about Goldman Scarlato & Penny, P.C., please visit our website at www.lawgsp.com or contact Paul Scarlato, firstname.lastname@example.org or Mark Goldman, email@example.com