Goldman Sachs (GS Quick QuoteGS - Free Report) and HSBC Holdings plc (HSBC Quick QuoteHSBC - Free Report) , along with the other two companies, have settled a long-standing class action lawsuit, putting an end to claims of market manipulation in the platinum and palladium markets that have persisted for over a decade.

The other defendants in the lawsuit are German industrial company BASF (BASFY Quick QuoteBASFY - Free Report) and London-based ICBC Standard Bank. 

GS, HSBC, BASFY and ICBC Standard Bank have agreed to pay $20 million to settle the long-standing platinum price-fixing antitrust lawsuit. 

The settlement resolves claims that firms manipulated the prices of palladium and platinum, two essential metals used in several industries.

The U.S. District Judge Gregory Woods in Manhattan accepted a preliminary settlement of the proposed class action on Friday, marking a milestone in the lawsuit dating back to 2014.

Metal Price-Fixing Lawsuit at a Glance

The platinum price-fixing case accused the four defendants of colluding to manipulate platinum and palladium prices between Jan. 1, 2008, and Nov. 30, 2014. This alleged manipulation includes sharing confidential consumer data, anticipating pricing adjustments and initiating fraudulent ‘spoof’ orders.

Reportedly, price manipulation that benefited the banks affected platinum and palladium, two elements essential to the manufacturing of catalytic converters for lowering automobile emissions and in jewelry and dentistry. 

The plaintiffs, who were purchasers of these metals and related futures contracts, claimed that the collusion unfairly reduced prices, lowering costs for the banks and their clients and allowing them to avoid losses on their futures positions.

Lawyers for the plaintiffs have praised the settlement as a fair and satisfactory resolution. They plan to request up to one-third of the settlement amount or around $6.67 million, in legal fees and up to $600,000 in expenses. Final approval of the deal is expected in January.

Final Words

The physical commodities businesses of banks have long been the subject of regulatory scrutiny. Manipulating the foreign currency markets and financial benchmarks has resulted in penalties for multiple banks.

Several banks are stepping away from the physical commodity industry due to increased regulatory scrutiny and lower profitability. Companies that still deal in tangible commodities are required to shift toward automation to improve transparency and prevent manipulation.

This lawsuit is part of a broader trend of litigation in the Manhattan court, where many banks have faced allegations of colluding in various markets, including interest rate benchmarks, U.S. Treasuries, currencies and commodities. Such setbacks are likely to impact the banks' financials.