View source for Aluminium price-fixing conspiracy

The '''aluminium [[price-fixing]] conspiracy''' was an effort by [[Goldman Sachs]], [[JPMorgan Chase]], [[Glencore]] and their warehouse companies to inflate the price of [[aluminium]] by creating artificial supply shortages at their warehouses between 2010 and 2013.
Although it was described by others as just a [[conspiracy theory]],<ref name=silly/><ref>{{Cite news | url=https://alphaarchitect.com/2013/10/goldman-sachs-warehouse-trade-conspiracy-theory/ | title=GOLDMAN SACHS' WAREHOUSE TRADE–CONSPIRACY THEORY! | work=Alpha Architect}}</ref> in a July 2013 article, [[David Kocieniewski]], a journalist with ''[[The New York Times]]'', accused Goldman Sachs and other Wall Street firms of "capitalizing on loosened federal regulations" to manipulate "a variety of commodities markets", particularly aluminum, citing "financial records, regulatory documents, and interviews with people involved in the activities".<ref name=Shuffle>{{cite news |url=https://www.nytimes.com/2013/07/21/business/a-shuffle-of-aluminum-but-to-banks-pure-gold.html |last1=Kocieniewski |first1=David |title=A Shuffle of Aluminum, but to Banks, Pure Gold |work=[[The New York Times]] |date=July 20, 2013 |url-access=limited |archive-date=January 17, 2014 |archive-url=https://web.archive.org/web/20140117200136/http://www.nytimes.com/2013/07/21/business/a-shuffle-of-aluminum-but-to-banks-pure-gold.html|url-status=live}}</ref> After Goldman Sachs purchased aluminum warehousing company Metro International in 2010, the wait of warehouse customers for delivery of aluminum supplies to their factories – to make beer cans, home siding, and other products – went from an average of 6 weeks to more than 16 months.<ref name=Zamansky>{{cite news |url=https://www.forbes.com/sites/jakezamansky/2013/08/08/the-great-vampire-squid-keeps-on-sucking/ |title=The Great Vampire Squid Keeps On Sucking |date=August 8, 2013 |last=Zamansky | first=Jake |work=[[Forbes]]| url-access=limited |archive-date=September 8, 2017 |archive-url=https://web.archive.org/web/20170908191835/https://www.forbes.com/sites/jakezamansky/2013/08/08/the-great-vampire-squid-keeps-on-sucking/ |url-status=live}}</ref><ref name=Shuffle/> The premium on all aluminum sold in the spot market doubled, with industry analysts blaming the lengthy delays at Metro International, costing American consumers more than $5 billion from 2010 to 2013.<ref name=Shuffle/> Goldman's ownership of a quarter of the national supply of aluminum – a million and a half tons – in a network of 27 Metro International warehouses in Detroit, Michigan, was blamed.<ref name=Shuffle/><ref name=Stanley>{{cite news | url=https://www.usnews.com/opinion/blogs/economic-intelligence/2013/07/24/how-goldman-sachs-and-wall-street-manipulate-alumnimum-and-other-commodities | title=The Goldman Sachs Guide To Manipulating Commodities | work=[[U.S. News & World Report]] | date=July 24, 2013 | last=Stanley | first=Marcus | archive-date=January 25, 2017 | archive-url=https://web.archive.org/web/20170125160513/http://www.usnews.com/opinion/blogs/economic-intelligence/2013/07/24/how-goldman-sachs-and-wall-street-manipulate-alumnimum-and-other-commodities | url-status=live }}</ref> To avoid hoarding and price manipulation, the London Metal Exchange requires that "at least 3,000 tons of that metal must be moved out each day". According to the article, Goldman dealt with this requirement by moving the aluminum – not to factories, but "from one warehouse to another".<ref name=Shuffle/>
In August 2013, Goldman Sachs was subpoenaed by the federal [[Commodity Futures Trading Commission]] as part of an investigation into complaints that Goldman-owned metals warehouses had "intentionally created delays and inflated the price of aluminum".<ref>{{cite news |title=U.S. Subpoenas Goldman in Inquiry of Aluminum Warehouses |url=https://www.nytimes.com/2013/08/13/business/us-subpoenas-goldman-in-inquiry-of-aluminum-warehouses.html |last=Kocieniewski |first=David |work=[[The New York Times]] | date=August 12, 2013 |url-access=limited |archive-date=September 16, 2013 |archive-url=https://web.archive.org/web/20130916023814/http://www.nytimes.com/2013/08/13/business/us-subpoenas-goldman-in-inquiry-of-aluminum-warehouses.html | url-status=live}}</ref>
According to Lydia DePillis of Wonkblog, when Goldman bought the warehouses it "started paying traders extra to bring their metal" to Goldman's warehouses "rather than anywhere else. The longer it stays, the more rent Goldman can charge, which is then passed on to the buyer in the form of a premium."<ref name=DePillis>{{cite news | url=https://www.washingtonpost.com/news/wonk/wp/2013/07/22/heres-how-goldman-sachs-is-making-your-beer-more-expensive/ | title=Here's how Goldman Sachs is making your beer more expensive | first=Lydia | last=DePillis | newspaper=[[The Washington Post]] | date=July 22, 2013 | url-access=subscription | archive-url=https://web.archive.org/web/20170125160627/https://www.washingtonpost.com/news/wonk/wp/2013/07/22/heres-how-goldman-sachs-is-making-your-beer-more-expensive/ | archive-date=January 25, 2017 | url-status=live }}</ref> The effect is "amplified" by another company, [[Glencore]], which is "doing the same thing in its warehouse in [[Vlissingen]]".<ref name=DePillis />
Columnist Matt Levine, writing for ''[[Bloomberg News]]'', described the [[conspiracy theory]] as "pretty silly", but said that it was a rational outcome of an irrational and inefficient system which Goldman Sachs may not have properly understood.<ref name=silly>{{cite news | title=The Goldman Sachs Aluminum Conspiracy Was Pretty Silly | url=https://www.bloomberg.com/view/articles/2014-11-20/the-goldman-sachs-aluminum-conspiracy-was-pretty-silly | first=Matt | last=Levine | work=[[Bloomberg News]] | date=November 20, 2014 | url-access=subscription | archive-date=August 9, 2017 | archive-url=https://web.archive.org/web/20170809170354/https://www.bloomberg.com/view/articles/2014-11-20/the-goldman-sachs-aluminum-conspiracy-was-pretty-silly | url-status=live }}</ref>
In December 2014, Goldman Sachs sold its aluminum warehousing business to Ruben Brothers.<ref>{{cite news |url=https://www.wsj.com/articles/goldman-sachs-sells-aluminum-business-to-swiss-firm-1419279027 |last1=Berthelsen |first1=Christian |last2=Iosebashvili |first2=Ira |title=Goldman Sachs Sells Aluminum Business to Swiss Firm | work=[[The Wall Street Journal]] |date=December 22, 2014 |url-access=subscription |issn=0099-9660 |archive-date=June 23, 2017 |archive-url=https://web.archive.org/web/20170623083504/https://www.wsj.com/articles/goldman-sachs-sells-aluminum-business-to-swiss-firm-1419279027 |url-status=live}}</ref><ref>{{cite news |url=https://www.reuters.com/article/goldman-metro-idUSL1N0U61FW20141222 |last1=Leff |first1=Jonathan |last2=Mason |first2=Josephine |title=UPDATE 2-Goldman sells Metro metals warehouse unit to Reuben Bros |work=[[Reuters]] |date=December 22, 2014 |archive-date=April 30, 2017 |archive-url=https://web.archive.org/web/20170430061553/http://www.reuters.com/article/goldman-metro-idUSL1N0U61FW20141222 |url-status=live}}</ref><ref>{{cite news |url=https://dealbook.nytimes.com/2014/12/22/goldman-sells-aluminum-subsidiary/ |last1=Popper |first1=Nathaniel|title=Goldman Sells Aluminum Subsidiary |work=[[The New York Times]] |date=December 22, 2014 |url-access=limited |archive-date=July 22, 2017|archive-url=https://web.archive.org/web/20170722150327/https://dealbook.nytimes.com/2014/12/22/goldman-sells-aluminum-subsidiary/ |url-status=live}}</ref>
In March 2015, the legal case against Goldman Sachs, JPMorgan Chase, Glencore, the two investment banks' warehousing businesses, and the London Metal Exchange in various combinations – of violating U.S. anti-trust laws, was dismissed by [[United States District Court for the Southern District of New York]] Judge [[Katherine B. Forrest]] in [[Manhattan]] for lack of evidence and other reasons.<ref>{{Cite web | url=https://casetext.com/case/in-re-aluminum-warehousing-antitrust-litig-6 | title=In re Aluminum Warehousing Antitrust Litig. | date=March 4, 2015}}</ref> The lawsuit was revived in 2019 after the 2nd U.S. Circuit Court of Appeals in Manhattan said the previous decision was in error. That case was dismissed by judge [[Paul A. Engelmayer]] in 2021 although [[Reynolds Consumer Products]] and two other plaintiffs that had directly transacted with the defendants were allowed to pursue the case.<ref>{{Cite news | url=https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/price-manipulation-charges-against-glencore-goldman-jpmorgan-dropped-8211-reuters-62726103 | title=Price manipulation charges against Glencore, Goldman, JPMorgan dropped – Reuters | first=Karla | last=Escober | work=[[S&P Global]] | date=February 19, 2021}}</ref> Those purchasers settled with Goldman and JPMorgan Chase in 2022.<ref>{{Cite news | url=https://www.law360.com/articles/1485106/goldman-sachs-jpmorgan-near-aluminum-antitrust-deal | title=Goldman Sachs, JPMorgan Near Aluminum Antitrust Deal | first=Craig | last=Clough | work=[[Law360]] | date=April 18, 2022 | url-access=subscription}}</ref>
==See also==
* [[Lysine price-fixing conspiracy]]
==References==
{{Reflist}}
[[Category:2013 scandals]]
[[Category:Aluminium]]
[[Category:Corporate scandals]]
[[Category:Goldman Sachs]]
[[Category:JPMorgan Chase]]