The London Metal Exchange (LME) and Goldman Sachs are being sued in US court over alleged anti-competitive and monopolistic behaviour in aluminum storage.
The metal exchange will fight the class-action lawsuit, which its management believes is without merit, the LME's owner, Hong Kong Exchanges and Clearing Limited, said in a statement.
Wall Street banks are facing increased scrutiny of their involvement in businesses that store and transport commodities such as oil and aluminium.
The LME and Goldman Sachs Group Inc are named as co-defendants in the suit alleging "anti-competitive and monopolistic behaviour in the warehousing market in connection with aluminium prices."
The lawsuit was filed August 1 by lead plaintiff Superior Extrusion Inc, a maker of aluminium tubing and beams, in US District Court for the Eastern District of Michigan.
RISING METAL PRICES
A growing number of buyers have complained about rising metal prices stemming from long waiting times at warehouses.
To address those concerns, Goldman said last week that it is taking measures to make more aluminium immediately available to customers at its metal storage business, Metro International Trade Services, which operates under LME regulations.
The bank pointed out last week that "the overall delivered price of aluminium is down nearly 40 per cent since its 2006 peak levels."
Hong Kong Exchanges, which operates the southern Chinese city's stock exchange, last year bought the LME, which approves and licenses a network of more than 700 metal storage facilities in 40 locations across the United States, Europe and Asia.
Last month, a US Senate committee held a hearing into whether banks should be allowed to control power plants, warehouses and oil refineries.
JPMorgan Chase & Company said last week that the possibility of new regulations was a factor behind its decision to consider selling some of its physical commodities business, which includes metals and energy.
It has agreed to pay US$410 million to settle accusations by US regulators that it manipulated electricity prices.