US regulator issues subpoenas over metals warehouse probe

City A.M. Reporter
THE STATES-SIDE probe into the metals warehousing industry intensified yesterday, after it emerged that the US commodities watchdog has subpoenaed a number of firms including Swiss commodities giant Glencore.

The US Commodity Futures Trading Commission (CFTC) sent the subpoenas last week, sources familiar with the matter said, after a letter from the regulator last month ordered warehouse firms to preserve emails, documents and instant messages from the past three years.

The subpoenas are the latest sign that the CFTC is stepping up its inquiry as it looks into allegations by users of metals, such as Coca-Cola, that warehousing firms have inflated costs by restricting the delivery of metals out of the London Metal Exchange (LME) network of warehouses.

Glencore and its metals warehousing arm Pacorini received subpoenas on Monday, one of the sources said. A spokesman for Glencore declined to comment.

A second firm has also received a subpoena to provide documents relating to correspondence with the LME, another source said.

The Financial Times reported late on Monday that Goldman Sachs and JP Morgan have also received subpoenas. Goldman Sachs and

JP Morgan declined to comment.

The industry used to be primarily run by traditional warehouse firms such as C.Steinweg and CWT Commodities, but in recent years it has been dominated by banks such as Goldman Sachs and JP Morgan Chase & Co as well as large commodities traders such as Glencore Xstrata and Trafigura, all of which have bought metals warehouse businesses in the last three years.

The LME declined to comment.