U.S. Hedge Fund Sued LME over Nickel Crisis

SEATTLE (Scrap Monster): The London Metal Exchange (LME) has been sued by U.S. hedge fund Elliot Associates after the nickel crisis hit the 145-year old exchange during the month of March. It must be noted that the exchange was forced to halt nickel trading and cancel trades after prices doubled to exceed $100,000 per tonne. The LME had blamed short covering by one of the world’s topmost nickel producers for the crisis.

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The judicial review claim filed by Elliot Associates and Elliot International in a British Court names the LME and LME Clear Limited as defendants. According to Elliot, LME should not have halted trading and cancelled deals. Furthermore, the LME acted unreasonably and irrationally by taking into account irrelevant factors, including its own financial position, it alleged.

The Exchange is being probed by market regulators for its action. Also, it has been struggling to regain trust in its nickel market. The legal action by Elliot Associates thus puts more pressure on the exchange.

Meantime, the LME noted that it was forced to halt trading and cancel deals so as to return the market to an orderly state. It argued that Elliot’s grounds for complaint are without merit and confirmed that it will vigorously defend any judicial review proceedings against the exchange.