The complaint against Goldman Sachs Group Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM) and Glencore Xstrata Plc. (LON:GLEN) was filed by Master Screens Inc., a company based in Jacksonville, Florida which is using aluminum in large quantities and by the individual plaintiff Daniel Price Bart of Tallahassee. JP Morgan Chase is the biggest U.S. bank by assets, Goldman Sachs is an American multinational investment banking firm and Glencore Xstrata is an Anglo–Swiss multinational commodity trading and mining company headquartered in Baar, Switzerland with offices in the U.S.
The banks, together with the largest commodity trader in the world, are accused of conspiring to price manipulation by withholding huge stocks of aluminum in warehouses located in Detroit, Michigan and of violation federal legislation on competition. Goldman Sachs was sued last week by a company in Michigan for similar irregularities.
“By inserting itself into a healthy industry producing widely needed commodities, severely degrading functionality and widely distributing costs while itself benefiting, Goldman Sachs and JPMorgan couldn’t fit a more archetypal description of a parasite on the markets,” reads the complaint.
Representatives of the two banks said the allegations are unfounded.
“We believe this suit is without merit and we intend to vigorously contest it. We also note that aluminum prices are down 40 percent from their peak in 2006,” said Michael DuVally, a spokesman for Goldman Sachs.
“There are no queues at our warehouses and we believe this suit has no merit,” said Brian Marchiony, a spokesman for JPMorgan Chase.
Detroit warehouses, mostly owned by Goldman Sachs and JPMorgan, hold more than one million tons of aluminum, and the rules of the London Metal Exchange are limiting the stock outputs, according to the complaint. Henry Bath & Son Ltd., described in the complaint as a “metal warehousing giant,” was purchased by JPMorgan in 2010.
U.S. authorities recently turned their attention to the holding of warehouses by major U.S. banks, which began in consequence to reduce their exposure to such activities.
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