Goldman Sachs, UBS, and HSBC Off the Hook on Metals Antitrust Claim

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By Eleanor Tyler

BASF Corp., UBS AG, Goldman Sachs Intl. and HSBC Bank USA N.A. may not have to pay damages in antitrust claims of price fixing after a judge ruled that the plaintiffs lacked standing ( In re Platinum and Palladium, S.D.N.Y., No. 14-cv-09391, 3/28/17 ).

If the platinum and palladiaum sellers’ claim were allowed to continue, it would “vastly extend the potential scope of antitrust liability” and possibly bankrupt some of the world’s largest banks, Judge Gregory H. Woods said. Damages could accrue in the trillions if the “indirect” plaintiffs are allowed to proceed in court, Woods said.

Woods threw out the plaintiffs’ antitrust claim after concluding their trades don’t have a close enough connection to the banks that set the prices for those metals. Woods said the plaintiffs aren’t efficient enforcers of the antitrust laws and therefore lack standing.

Woods reasoned that allowing suit by all who lost money during these transactions against the banks that set the benchmark would overextend antitrust liability. That liability would be disproportionate to the original wrong, he said. In burgeoning derivatives markets, the biggest banks in the world would suffer major damages because of trebling.

Must Transact Directly

With antitrust claims thrown out, only the Commodity Exchange Act claims against Goldman Sachs and HSBC after 2011 remain viable in the suit, Woods said.

The judge found that the plaintiffs, a class that sold physical metal or futures between 2008 and 2014, are not the right parties to bring these claims because they did not transact directly with the banks involved in the platinum and palladium fixing.

Woods also noted that whole swath of the periodic table is currently at issue in similarly-alleged market manipulation lawsuits. Plaintiffs also have suits pending for benchmark or price manipulation in gold, silver, aluminum, copper and zinc.

In deciding to limit recovery to plaintiffs that trade directly with the defendants, Woods reached a different decision on standing than fellow Judge Valerie E. Caproni reached in gold and silver antitrust suits, which are currently in discovery.

Woods also dismissed claims against BASF Metals Ltd., ICBC Standard Bank plc and London Platinum and Palladium Fixing Company for lack of personal jurisdiction. UBS and BASF Corp. were dismissed because the plaintiffs didn’t adequately tie them to the alleged manipulation.

To contact the reporter on this story: Eleanor Tyler in Washington at etyler@bna.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bna.com

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