Hedge Fund Elliott Loses Appeal in LME Nickel Lawsuit

 Hedge fund Elliott Associates lost its appeal on Monday against the dismissal of its lawsuit against the London Metal Exchange (LME) regarding billions of dollars in canceled nickel trades, with judges emphasizing the importance of market stability.

Elliott Associates loses appeal against LME over canceled nickel trades.

The LME had suspended trading and annulled $12 billion in nickel trades in March 2022, when prices surged to over $100,000 per metric ton within hours. Elliott's legal action was initiated after the LME's decision, which the High Court dismissed in November 2023.

Judge Stephen Males, part of the three-judge panel, ruled that the extreme price movement on March 8, 2022, constituted "a once-in-a-generation event," affirming that the LME acted lawfully in its cancellation of trades. He stated, "To have allowed the 8th March trades to stand would have meant a real risk of what has been graphically described as a 'death spiral' in the international metals market."

In July, Elliott had urged the Court of Appeal to reverse the ruling, claiming the LME had failed to disclose essential documents. Elliott's legal team pointed to late-released documents detailing the exchange's internal procedures, including its "Kill Switch" and "Trade Halt" mechanisms, as well as an internal report suggesting potential conflicts of interest.

A spokesperson for Elliott expressed disappointment with the ruling and indicated that the firm was analyzing the decision with its legal team to consider its next steps.

Elliott and market maker Jane Street Global Trading had sought a combined $472 million in compensation, accusing the LME of unlawful conduct during the chaotic trading period. The LME, the world’s oldest and largest metals marketplace, welcomed the ruling, which reinforced its authority to cancel trades amid extreme market fluctuations.

LME Chairman John Williamson commented, "Now we are focused on looking to the future as we progress our market modernization strategy." Following the March 2022 events, the LME commissioned an independent study and implemented reforms in response to the public scrutiny that Elliott's challenge generated.

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