By Ira Iosebashvili
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 ira.iosebashvili@wsj.com
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