NEWSBREAK - Metro agrees $10 mln LME settlement for alleged warehouse breach

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Kathleen Retournekathleen.retourne@fastmarkets.comJoint News Editor - Europe+44 (0) 20 7337 2144

London 29/07/2016 - Warehouse company Metro International has agreed to pay a $10 million settlement to the London Metal Exchange for alleged breaches of the exchange's warehouse agreement.

The alleged breaches were in relation to transactions made over September 2010-2013 during which time the warehouse company was owned by Goldman Sachs.

"As part of these transactions, Metro offered inducements, which were accepted for certain metal stored in Metro LME Detroit by the metal owners, who cancelled their warrants representing such metal. The cancelled metal was physically delivered out of Metro LME Detroit and then such metal or a portion of it was rewarranted at a later date in Metro LME Detroit," the exchange said in a note on Friday.

As part of a two-year investigation, the influential US Senate Permanent Subcommittee on Investigations alleged that Goldman Sachs, via Metro International Trade Services, paid incentives to Deutsche Bank, Glencore and UK hedge fund Red Kite to move metal on and off warrant in what has been deemed a merry-go-round trade.

The transactions gave rise to adverse publicity and scrutiny as regards to the LME and the exchange was not notified prior to these transactions taking place, the exchange said. 

"For the above reasons, the LME considers that the payment by Metro is appropriate and justified. The enforcement committee has ratified the settlement," the note said.

The settlement is inclusive of LME costs without Metro - now owned by Reuben Brothers - admitting or denying any of the alleged breaches.

(Editing by Mark Shaw)



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