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Forced to trial, MorganChase settles copper price-rigging lawsuit
By Ryan J. Foley
via Yahoo News
Tuesday, May 29, 2007
MADISON, Wisconsin -- J.P. Morgan Chase & Co. has settled a long-running antitrust lawsuit filed by copper companies who claimed the bank's predecessor conspired with a Japanese trading house to manipulate the copper market in the 1990s.
A trial had been scheduled to begin Tuesday in federal court in Madison but court officials said the companies settled late Friday. The details of the settlement are confidential.
About 20 manufacturing companies that claimed they purchased copper at inflated prices between 1993 and 1996 sought as much as $1 billion in damages and attorney's fees from J.P. Morgan.
The settlement ends what is believed to be the last lawsuit stemming from a multibillion dollar copper trading scandal that roiled world copper markets and damaged the reputation of Sumitomo Corp., a 300-year-old Japanese global metals trader.
Sumitomo disclosed in 1996 that its star copper trader, Yasuo Hamanaka, amassed $2.6 billion in losses in unauthorized trades over a decade. The revelation caused copper prices to plummet worldwide.
The companies claimed that before the collapse, J.P. Morgan and one of its subsidiaries provided financing to help Hamanaka artificially reduce copper supplies to drive up prices.
They did so by buying up parts of the copper market so that supplies owned by Sumitomo, which controlled 5 percent of the world's copper production at the time, would be worth more, the companies claimed.
J.P. Morgan Chase & Co., the successor company to J.P. Morgan and The Chase Manhattan Bank, had no comment on the deal, spokesman Joe Evangelisti said.
Philadelphia lawyer David Weinstein, who represented the copper companies, also declined comment.
"I can't tell you anything because it's a confidential settlement," he said. "I wish I could."
The companies -- which include Southwire Co., Mueller Copper Tube Co., and Aetna Insulated Wire -- scored a major victory last month when U.S. District Judge Barbara Crabb ordered the case to trial and threw out J.P. Morgan's request to dismiss it.
Crabb wrote in a 74-page decision that the evidence suggested an agreement between the bank and Sumitomo "to 'fix' the copper market."
The settlement on Friday came after Crabb granted the companies' motion to bar jurors from learning that any damages they would award in the case would be tripled under federal antitrust laws.
It also came after seven years of intense litigation in federal court.
Sumitomo has already paid millions of dollars to settle the case and other class-action suits filed in the U.S. and abroad. Merrill Lynch, which also financed some of the transactions, has also settled the case and other suits.
Hamanaka served more than seven years in prison on fraud and forgery charges.
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