Elliott Investment Management lost its appeal against the London Metal Exchange’s decision to cancel billions of dollars in nickel trades in early March 2022.
Elliott was seeking damages of $456 million, after nickel prices doubled to a record $100,000 per tonne within several hours of chaotic trading, prompting the LME to suspend trading and cancel $12 billion of earlier trades.
Judge Stephen Males ruled that the LME had acted lawfully in what “is ultimately a straightforward case.”
“The LME was legally required to ensure that it had the power to cancel trades in the event of extreme price movement during a short period, which is precisely what occurred on the morning of 8th March 2022. That was a once in a generation event,” Males said in his ruling.
To have allowed the trades to stand would have put the market at risk of what has been described during the proceedings as a “death spiral” in the international metals market, the judge said.
“The LME board is pleased with this positive outcome, which reinforces the Divisional Court’s findings that the LME’s actions were lawful, rational and in accordance with its rules,” John Williamson, chairman of the exchange, said in a statement.
He said the LME’s leadership had prioritized the interests of the market as a whole during the events of 2022, and he applauded their “tenacity and integrity” over the last few years as they defended their actions.
Elliott did not immediately respond to a request for comment on Monday’s ruling.
The LME, which is owned by Hong Kong Exchanges & Clearing, had sparked uproar among traders by the actions it took in March 2022. The price of nickel had soared after Chinese nickel producer Tsingshan Holding Group had made a large bet on falling prices that coincided with market concerns that potential sanctions against Russia would affect nickel supplies.
Elliott and fellow claimant Jane Street Global Trading argued the LME had no power to unwind transactions to prevent defaults or tackle systemic risks. They had been pursuing an unusual legal strategy by seeking a judicial review, which is an action normally brought to challenge decisions made by public bodies. They had argued that the LME had acted beyond its powers and failed to consult parties who would be disadvantaged by its decision. But the U.K.’s Administrative Court in London rejected their claims in November, so Elliott had appealed the decision.
Elliott is one the world’s most well-known of the activist investors. The Florida-based hedge fund was founded by billionaire Paul Singer in 1977 with $1.3 million. The firm now has about $65 billion in assets under management, and Singer has a fortune currently estimated at $6.2 billion. Elliott has taken on some of the world’s biggest companies and famously pursued Argentine bond payments for 15 years, seizing one of the country’s naval vessels while it was docked in Africa.
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