HSBC share price: Bank among four companies sued over alleged precious metal price fixing

on Nov 27, 2014
Updated: Feb 25, 2022
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  • HSBC sued in the US over allegations that they have conspired since 2007 to rig platinum and palladium prices.
  • HSBC used inside information about client purchase and sell orders to benefit from movements in metal prices.
  • Shares of the largest UK bank were 0.6% lower at 630.40p as of 10:24 UTC.

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iNVEZZ.com, Thursday, November 27: HSBC Holdings Plc (LON:HSBA), Goldman Sachs Group Inc(NYSE:GS) and two other companies are being sued in the US over allegations that they have conspired since 2007 to rig platinum and palladium prices.
According to a lawsuit filed on Tuesday in the US District Court in Manhattan, HSBC and Goldman used inside information about client purchase and sell orders to benefit from movements in the price of the metals. Standard Bank Group Ltd and BASF SE are also being sued as part of the same case. The plaintiff’s lawyers called the case the first US class-action lawsuit over alleged price-fixing of the two metals.
In today’s trading, HSBC shares were 0.6 percent lower at 630.40p as of 10:24 UTC. The lender’s stock has fallen 4.8 percent since the start of the year.
**Front running**
The lawsuit was filed by Modern Settings LLC, a Florida-based maker of jewellery and police badges, which claimed that metal purchasers lost millions of dollars as a result of the actions of the four companies. Modern Settings claimed that the companies “were privy to and shared confidential, non-public information about client purchase and sale orders that allowed them to glean information about the direction” of prices.

This practice, where traders profit from information about their clients’ trading intentions is called ‘front running’. Traders will often know the way a particular order will affect the market and, based on that insight, place their own trades ahead of that order.
According to the plaintiff, the companies also manufactured “spoof” orders.
The London Metal Exchange said last month that it will take charge of platinum and palladium price fixing and will put in place a new electronic platform from December 1.
However, these changes “have come too late”for Modern Settings and other prospective class members, according to the suit, which seeks unspecified damages for the defendants’ alleged violations of US antitrust and commodity laws.
Platinum and palladium are used primarily in the jewellery and the automotive industries.
**Analysts on HSBC**
According to the Financial Times, as of November 26, 2014, the consensus forecast amongst 58 polled investment analysts covering HSBC suggests that investors should hold their position in the company. The consensus estimate reflects a deterioration of investment analyst sentiment, which occurred yesterday.
**As of 14:44 UTC buy HSBC shares at 628.80p**
**As of 14:44 UTC sell HSBC shares a t628.60p**