A Florida jewelry manufacturer is serving as the plaintiff for a class-action suit that claims the prices of platinum and palladium have been manipulated to enrich certain banks and dealers.
In a complaint filed Nov. 25 in New York federal court, Sarasota-based Modern Settings charges that the three banks and one metals dealer that set the prices via twice-daily teleconferences have used the process for their own ends.
“By their very design, the platinum and palladium fixings give the defendants the opportunity to collusively discuss and/or signal desired non-competitive price moves, while the rest of the market is left in the dark,” says the suit, which targets teleconference participants Goldman Sachs, HSBC, Standard Bank, and BASF Metals Ltd.
The filing alleges the defendants colluded with their in-house trading desks “to ensure that platinum and palladium prices moved in a certain, non-competitive direction”; shared nonpublic customer information; and concocted “spoof” orders that they had no intention of executing to fool the market. Its analysis of platinum and palladium prices found numerous anomalies that are “suggestive of price artificiality,” it says.
Modern Settings has also served as plaintiff for suits targeting the gold- and silver-price fixes.
Like the mechanisms for setting the gold and silver benchmarks, the 25-year-old price fix for platinum and palladium is being phased out. On Oct. 16, the London Metal Exchange announced it had won a bid to set the benchmark prices of those metals through a custom-built electronic solution set to go live Dec. 1.
But the suit says those changes are “coming too late” for all those harmed. It seeks to represent all those who traded or held platinum or palladium from Jan. 1, 2007, to the present.
The defendants could not be reached for comment.