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Goldman, JPMorgan sued over zinc prices

Published 24/05/2014, 02:20
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By Andrew Longstreth

NEW YORK (Reuters) - A lawsuit filed on Friday alleges that Goldman Sachs Group Inc (N:GS), JPMorgan Chase & Co (N:JPM), the London Metal Exchange and metal warehouse operators have conspired since 2010 to manipulate the price of zinc in the United States.

The lawsuit, filed in the Southern District of New York, also names as defendants the mining and commodities trading group Glencore Xstrata (L:GLEN) and its Pacorini Metals USA LLC unit. Metro International Trade Services, the metal warehousing of Goldman Sachs, is also named a defendant.

The lawsuit, which seeks class action status, echoes the allegations made in previously filed lawsuits over alleged manipulation of the aluminium market in the United States.

It claims the defendants used a variety of means to restrain trade in zinc, including by manipulating LME rules to ensure long queues for metals and shuttling zinc between warehouses for no reason other than to "cause and exacerbate anticompetitive effects."

Like aluminium, physical prices of zinc have soared in recent years due to the queues, causing extra costs to users, such as galvanizers.

London Metal Exchange warehouses in New Orleans hold 80 percent of the zinc in the exchange-registered stockpile. Pacorini operates most of the sheds in that port city.

JPMorgan and Glencore declined to comment on the lawsuit. A spokesman for Goldman Sachs said it intended to "vigorously contest the suit."

LME did not respond to a request for comment.

The lawsuit was filed by Duncan Galvanizing Corp of Everett, Massachusetts.

Duncan Galvanizing did not return a call and an email asking for comment.

The case is Duncan Galvanizing Corp v. The London Metal Exchange, et al, U.S. District Court, Southern District of New York, No. 14-03728.

(Reporting by Andrew Longstreth and Josephine Mason; Editing by Mohammad Zargham)

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