Saturday, Apr 01, 2023

US hedge fund sues London Metal Exchange for $456m over 'irrational' nickel trading decision

US hedge fund sues London Metal Exchange for $456m over 'irrational' nickel trading decision

The lawsuit stems from one of the trading hub's most chaotic days ever, when the price of the metal exploded by 250%.

The London Metal Exchange (LME), one of the world’s most important commodity trading hubs, is being sued by a US hedge fund for $456m (£363m).

The lawsuit, filed by Elliot Management at the High Court in London last week, alleges that the LME acted “unreasonably and irrationally” when it decided to cancel trading on a chaotic day that saw the price of nickel double in mere hours to more than $100,000 per tonne.

The incident stems from an unprecedented event on 8 March, just weeks after Russia’s invasion of Ukraine.

With sanctions lined up against key Russian companies and individuals, investors were weighing the possibility that Nornickel - the world’s largest supplier of the nickel - would be prevented from exporting the metal.

As the price began to rise, traders with huge bets against the value of nickel began scrambling to buy back their contracts. This caused a spike of 250% in the price of nickel - the largest move in the history of the LME.

Nornickel is the largest producer of nickel in the world.

The frenzy caused a huge fallout for banks, producers and traders and in response the LME suspended trading for eight days.

“This decision to suspend trading was taken because the nickel market had become disorderly,” the LME’s parent company said, adding that it needed to protect smaller traders from going bust by the unexpected price increase.

But when nickel resumed trading on 16 March, the LME announced that it had cancelled all trades made on 8 March.

Elliot Management - run by billionaire Republican donor Paul Singer - is claiming in its lawsuit that the LME’s decision may have been illegal.

The trading hub “acted unlawfully in that it exceeded its powers when it cancelled those trades, or that it exercised the powers that it did have unreasonably and irrationally, in particular by taking into account irrelevant factors (including its own financial position) and failing to take into account relevant factors”, a spokesperson for Elliott said.

The hedge fund has not disclosed whether it was part of any trades on 8 March that were subsequently cancelled, and how much it would have stood to gain if so.

The LME, which said it would “vigorously” contest the legal action, is currently under investigation by the financial industry regulator and the Bank of England into the suspension and cancelled trades.


Ken 298 days ago
Simple they should ban long and short bets.. It is a stock market not a casino


Related Articles

Russia arrested an American reporter for the Wall Street Journal on espionage charges
Don’t Dismiss China’s Peacemaking Bid
China and Brazil have signed a new deal that will allow them to trade in their own currencies, bypassing the US dollar as an intermediary
Elon Musk and Others Call for Pause on A.I., Citing ‘Profound Risks to Society’
Nashville style execution
“We've had evidence prior to the pandemic that masks were largely ineffective at preventing community transmission of influenza “
Former Starbucks CEO Howard Schultz:
Former Starbucks CEO Howard Schultz rejects being labeled a "billionaire"
Jamie Dimon is being deposed over JPMorgan Chase role in Epstein lawsuits
Brand new security footage has just been released to the public showing the Active shooter Audrey Elizabeth Hale drove to Covenant Church School in her Honda Fit this morning, parked, and shot her way into the building
U.S. charges FTX's Bankman-Fried with paying $40 million bribe
Nashville Police release bodycam footage showing officers neutralizing trans shooter of Christian school
Fallen 'Crypto King' Who Owes Millions to Investors Was Kidnapped and Tortured
Regulators blame social media for SVB's rapid collapse: 'Complete game changer'
AOC explains why she opposes banning TikTok
Singapore’s Prime Minister says China and US need to stabilize relations because world can't afford a confict between the two superpowers
Gordon Moore, a co-founder of Intel Corporation, died at 94
Powell: Silicon Valley Bank was an 'outlier'
Bordeaux town hall set on fire in France pro democracy protest
Police violence in Paris
Donald Trump arrested – Twitter goes wild with doctored pictures
NYPD is setting up barricades outside Manhattan Criminal Court ahead of Trump arrest.
Credit Suisse's Scandalous History Resulted in an Obvious Collapse - It's time for regulators who fail to do their job to be held accountable and serve as an example by being behind bars.
Paris Rioting vs Macron anti democratic law
'Sexual Fantasy' Assignment At US School Outrages Parents
The US government has charged Chinese businessman Guo Wengui with leading a $1 billion fraud scheme that cheated thousands of followers out of their money.
Credit Suisse to borrow $54 billion from Swiss central bank
Russian Hackers Preparing New Cyber Assault Against Ukraine
"Will Fly Wherever International Law Allows": US Warns Russia After Drone Incident
If this was in Tehran, Moscow or Hong Kong
TRUMP: "Standing before you today, I am the only candidate who can make this promise: I will prevent World War III."
Drew Barrymore
China is calling out the US, UK, and Australia on their submarine pact, claiming they are going further down a dangerous road
A brief banking situation report
Lady bites police officer and gets instantly reaction
We are witnessing widespread bank fails and the president just gave a 5 min speech then walked off camera.
Donald Trump's asked by Tucker Carlson question on if the U.S. should support regime change in Russia?.
Silicon Valley Bank exec was Lehman Brothers CFO
Elon Musk Is Planning To Build A Town In Texas For His Employees
The Silicon Valley Bank’s collapse effect is spreading around the world, affecting startup companies across the globe
City officials in Berlin announced on Thursday that all swimmers at public pools will soon be allowed to swim topless
Fitness scam
Market Chaos as USDC Loses Peg to USD after $3.3 Billion Reserves Held by Silicon Valley Bank Closed.
Senator Tom Cotton: If the Mexican Government Won’t Stop Cartels from Killing Americans, Then U.S. Government Should
Banking regulators close SVB, the largest bank failure since the financial crisis
Silicon Valley Bank: Struggles Threaten Tech Startup Ecosystem"
Man’s penis amputated by mistake after he’s wrongly diagnosed with a tumour
In a major snub to Downing Street's Silicon Valley dreams, UK chip giant Arm has dealt a serious blow to the government's economic strategy by opting for a US listing
It's the question on everyone's lips: could a four-day workweek be the future of employment?