Banks and BASF Settle $20M Lawsuit Over Platinum, Palladium Price Manipulation
Four financial entities agree to pay $20 million to resolve a long-standing antitrust case alleging manipulation of platinum and palladium prices. The settlement awaits final approval in early 2025.
Goldman Sachs, BASF, HSBC, and ICBC Standard Bank have reached a $20 million settlement in a protracted antitrust lawsuit. The case, which has been ongoing for nearly a decade, accused these entities of collaborating to artificially lower platinum and palladium prices.
The settlement, filed on August 25, 2024, and approved by U.S. District Judge Gregory Woods in Manhattan, addresses allegations of market manipulation from January 1, 2008, to November 30, 2014. During this period, the defendants were accused of interfering with the twice-daily price fixings for platinum and palladium.
Platinum and palladium, both members of the platinum group metals (PGMs), play crucial roles in various industries. These metals are essential components in catalytic converters, which have been widely used since the 1970s to reduce harmful vehicle emissions. Additionally, they find applications in dentistry and jewelry manufacturing.
The lawsuit alleged that the defendants engaged in several manipulative practices:
- Sharing confidential customer data
- Front-running anticipated price movements
- Placing deceptive "spoof" orders
These actions purportedly resulted in artificially suppressed metal prices, benefiting the banks and their clients by reducing acquisition costs for platinum and palladium. Furthermore, it allegedly allowed the banks to avoid losses on their short positions in the futures markets.
"The settlement represents an excellent outcome that is fair, reasonable, and adequate for the affected parties."
The legal representatives for the purchasers plan to request up to one-third of the settlement amount, approximately $6.67 million, in legal fees. They are also seeking an additional $600,000 for expenses.
It's worth noting that this case is part of a broader pattern of legal actions against major financial institutions. The Manhattan court is currently handling several lawsuits accusing big banks of collusion in various markets, including interest rate benchmarks, U.S. Treasuries, currencies, and commodities.
The settlement's final approval is anticipated in January 2025. This resolution comes at a time when the global platinum market was valued at approximately $7 billion in 2023, highlighting the significant economic impact of these metals.
Interestingly, while this case focused on suppressing prices, the palladium market has seen remarkable growth in recent years. In 2019, the price of palladium surpassed that of gold for the first time, demonstrating the volatile nature of precious metal markets.
As the automotive industry remains the largest consumer of both platinum and palladium, the outcome of this case may have far-reaching implications for various sectors. The increasing importance of these metals in fuel cell technology for clean energy production further underscores their significance in the global economy.
