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Subpoenas Issued to Goldman Sachs, Major Metals Warehousers over Aluminum Pricing

Aug 13, 2013

Federal authorities have subpoenaed records from Goldman Sachs in response to allegations that the company intentionally manipulated wait times at its aluminum warehouses around the world to increase profits and raise the price of the metal.

The New York Times is reporting this week that the Commodity Futures Trading Commission (CFTC) is now taking on these accusations. The inflated cost of aluminum — driven higher by Goldman Sachs’ alleged practices — may have cost consumers billions of dollars in the past few years.

CFTC is looking for any Goldman Sachs records it can get its hands on; the financial services house is also one of the largest aluminum storage warehouse owners in the world. The New York Times is reporting that its subpoena is good for any “internal documents, emails, correspondence, voice recordings and other recordings” that may deal with the price and practice of storing aluminum. There are allegedly 30 “areas of interest” included in the federal subpoena, which also is seeking records from London Metal Exchange, which is supposed to regulate the warehousing of aluminum and other metals.

These subpoenas stem from complaints by companies that purchase aluminum, mostly in the U.S. These companies allege that Goldman Sachs is intentionally creating longer delays in accessing aluminum at the warehouses it owns, thus driving up the costs for both rental and storage; those costs are then passed on to aluminum buyers who say these delays in accessing the aluminum stored at the Goldman Sachs warehouses also delay their businesses, according to The New York Times.

The complaints appear to be sourced to “beverage makers and manufacturers” who complained that the wait time on accessing aluminum at Goldman Sachs warehouses suddenly rose from six weeks in 2010 to 16 months. It was then that Goldman Sachs purchased the aluminum storage warehouses from Metropolitan International Trade Services, The New York Times reports.

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