Goldman Sachs Group Inc and HSBC Holdings PLC were sued in New York over claims they conspired for eight years to manipulate prices for the precious metals platinum and palladium in what plaintiffs’ lawyers say is the first class-action lawsuit of its kind in the US.
Standard Bank Group Ltd, based in Johannesburg, and a metals unit of BASF SE, the world’s largest chemical company, were also sued.
The four companies are accused of using inside information about client purchases and sale orders to profit from price movements for the metals used in products ranging from jewelry to cars, according to a complaint filed on Tuesday in Manhattan with the US District Court for the Southern District of New York.
The lawsuit by Modern Settings LLC, a jeweler that buys precious metals and derivatives set on their prices, claims the companies “were privy to and shared confidential, nonpublic information about client purchase and sale orders that allowed them to glean information about the direction” of prices.
Similar lawsuits have been filed this year in Manhattan accusing banks of rigging the benchmark price for gold. Authorities around the world are examining the gold market for signs of wrongdoing.
Regulators tightened scrutiny of benchmarks after uncovering price-rigging in interbank loan rates and currencies. Silver became the first precious metal to change its traditional procedure in August, while Intercontinental Exchange Inc is to run the replacement for the 95-year-old London gold fixing. A new mechanism for platinum and palladium is to start on Monday.
The biggest uses of platinum and palladium are for jewelry and the production of catalytic converters, which curb harmful emissions from vehicles, the complaint said.
Automakers’ use of platinum is estimated to climb 7.9 percent to a six-year high of 3.39 million ounces this year, and there will be “broad-based growth” next year, auto catalysts producer Johnson Matthey PLC said.
Palladium auto use is expected to gain 4.9 percent this year to a record 206,951kg. While demand is to rise next year, it will likely be at a slower pace, the company predicted. Johnson Matthey makes about one-third of the world’s catalytic converters.
The complaint said the three banks and BASF subsidiary participated in twice-daily conference calls to set global price benchmarks for platinum and palladium, which also affected derivative products based on the precious metals.
“This unlawful behavior allowed defendants to reap substantial profits, while non-insiders, which include plaintiffs and members of the class, were injured,” lawyers for New York-based Modern Settings said in the filing.
Modern Settings needs a judge’s approval before it can represent other buyers of the metals.
The gross demand for platinum and palladium last year was more than 226,796kg and more than 272,155kg, respectively, the complaint said.
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