The London Stock Exchange is suing New York-based hedge fund Elliott Management for $ 456 million (£ 363 million) for its controversial decision to cancel nickel operations following a price increase linked to the invasion of Ukraine.
Elliott’s case, which was filed in the Supreme Court last week, claims that the LME acted “irrationally and irrationally” when it canceled operations originally conducted on March 8, a measure the exchange said which aimed to avoid disorderly trade.
The lawsuit will increase pressure on the LME, which is also facing a UK regulatory inquiry into the suspension and cancellation of such operations.
The LME suspended nickel trade for a week in early March after prices doubled over the course of a day to a record $ 100,000 a tonne. The rise in prices was caused by uncertainty about the availability of the metal, with fears that companies such as Moscow-based Nornickel, the world’s largest supplier of metal, could face sanctions as a result. of the invasion of Ukraine by Russia.
The exchange reopened trading on March 16, but caused more uproar when it canceled all transactions that took place on the first day of the suspension on March 8. The LME has defended its decision, saying it is necessary to protect the market and prevent smaller members of the exchange from splitting up.
“This decision to suspend trading was made because the nickel market had become disorganized,” LME’s parent company, Hong Kong Exchanges and Clearing (HKEX), said in a statement on Monday.
“The cancellations were made in retrospect to bring the market to the last moment when the LME could be sure that the market was functioning in an orderly manner. It should be emphasized that the LME always acted in the interest of the market as a whole. ”.
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Elliott, the world’s largest activist hedge fund and led by Republican billionaire donor Paul Singer, has claimed that the decision could have violated Elliott’s “human rights,” according to the HKEX announcement. on demand.
An Elliott spokesman said the hedge fund considered that the LME “acted illegally because it exceeded its powers when it canceled these operations, or that it exercised its powers irrationally and irrationally. , in particular taking into account irrelevant factors (including its own financial position) and not taking into account relevant factors ”.
The LME said it believed Elliott’s claim was “without merit” and said the exchange would “vigorously challenge it”.