LME Hit by Fresh Lawsuits over Nickel Trading Crisis

SEATTLE (Scrap Monster): The court filings suggest that the London Metal Exchange (LME) is facing fresh lawsuits from hedge funds and asset managers over cancellation of nickel trades in early-March last year.

As per reports, AQR Capital Management, along with nine other hedge funds including Flow Traders BV, Capstone Investment Advisors LLC and Winton Capital Management Ltd. have filed a lawsuit, claiming nearly £80 million ($96.3 million), to cover their losses on account of abrupt suspension of nickel trades by the exchange.

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In addition, Pala Investments Ltd., along with other funds, including Commodity Asset Management LLC too filed a lawsuit in London court.

Meantime, the exchange, in its recent filing with the Hong Kong Stock Exchange, noted that the AQR lawsuit is without merit. However, it didn’t make any mention about the Pala lawsuit. The LME noted that the action was necessary to avoid a $20 billion margin call that would have threatened the very existence and survival of the exchange.

The Financial Conduct Authority (FCA) - the UK’s market regulator had last week launched an enforcement investigation into the exchange’s conduct during the crisis. The Bank of England too had announced plans to appoint an independent monitor to oversee LME clearinghouse activities.