Hedge fund Moore Capital Management LP has agreed to pay $48.4 million to settle a class action alleging it manipulated the platinum and palladium markets. The settlement will purportedly compensate purchasers of futures tied to the metals.
The deal ends more than three years of litigation over a tactic called “banging the close,” a strategy in which a trader enters buy orders in the last seconds of a trading day to drive up futures’ settlement prices.
The plaintiffs, who sued after the Commodity Futures Trading Commission made allegations of attempted manipulation in April 2010, had valued their claims against Moore at higher than $400 million. Moore paid $25 million to settle the the CFTC action, but did not admit wrongdoing. The fund denies wrongdoing in this case and had pushed for the suit’s dismissal before it agreed to settle.
A former MF Global Inc. broker, Joseph F. Welsh III, has also agreed to settle manipulation claims against him. Welsh agreed to pay up to $35 million, though the settlement will be funded by insurance policies; his personal assets cannot be seized. Welsh’s insurance companies have indicated they will fight attempts to force them to pay.
The case is In re: Platinum and Palladium Commodities Litigation, case number 1:10-cv-03617, in the U.S. District Court for the Southern District of New York.