Paul Singer’s Elliott Associates Sues London Metal Exchange

Elliott Associates, a U.S. hedge fund founded and co-led by billionaire Paul Singer, has filed suit in a British court against the London Metal Exchange (LME). The legal action seeks $456 million from LME for retroactively canceling nickel trades placed from midnight to 8:15 a.m. GMT on March 8 of this year.

The LME asserts it acted to protect the overall market when nickel trading became “disorderly.” British regulators also are investigating the exchange over its nickel market actions.

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On March 8, nickel prices doubled in a single day to a sky-high $100,000 a tonne, triggered by concerns about the metal’s supply. The world’s largest nickel supplier, Nornickel, is headquartered in Moscow, and traders worried Nornickel could experience sanctions resulting from Russia’s invasion of Ukraine.

Following the price spike, the LME suspended nickel trading for a week and subsequently canceled the eight hours of March 8 trades. The exchange said the trade cancelations were intended to return the market to the time at which it last was orderly.

In an email, Elliott Associates said the LME had acted "unreasonably and irrationally, in particular by taking into account irrelevant factors (including its own financial position) and failing to take into account relevant factors." The email did not indicate what LME nickel positions the hedge fund had when the March 8 deals were canceled.

For its part, the exchange released a statement saying it had “an important role to play in ensuring the market is fair and orderly.” The LME responded to Elliott’s claim as being “without merit” and said it would “contest [the claim] vigorously.”