Hedge funds drop lawsuits against LME over nickel crisis

Bloomberg News | May 13, 2025 | 11:34 am Markets Europe Nickel

LME headquarters. (Image by Kreepin Deth, )

A group of hedge funds that sued the London Metal Exchange over the 2022 nickel crisis have dropped their legal action after similar arguments made in separate proceedings were rejected by UK courts.

The move means the exchange, which sparked fury by canceling $12 billion in trades after nickel prices surged due to a short squeeze, has faced down some $600 million in legal claims from some of the world’s highest profile investors.

Funds including AQR Capital Management, DRW Commodities LLC, and Pala Investments Ltd. had sued the LME claiming more than $100 million in damages over the 2022 nickel crisis. Their cases had been stayed pending the outcome of Elliott Investment Management’s high-profile legal action against the LME, which earlier this year concluded when the UK’s Supreme Court refused the fund permission to appeal the judgment against it.

The other funds’ cases have now been discontinued, according to people familiar with the matter and court filings. Representatives of the funds declined to comment or did not respond to requests for comment. A spokesperson for the LME declined.

Column: LME nickel lawsuits are about principle as much as money

The LME has argued that its actions in March 2022 were taken to protect the metals industry from a “death spiral” that would have bankrupted numerous players. While the UK courts have found that it acted legally, its regulator, the Financial Conduct Authority, in March fined the LME £9.2 million ($11.9 million) for having inadequate systems and controls to deal with the crisis.

In its annual report, the LME said the Supreme Court’s refusal to allow an appeal “effectively brings an end” to Elliott’s case against it. The report, dated Feb. 21 and filed earlier this month, also shows that Elliott and Jane Street, which brought the initial legal action, had made interim payments of over £4 million in 2024 to cover the LME’s legal costs.

The LME has largely recovered from the crisis, with volumes rising 18% last year to the fourth highest on record. Pre-tax profits at the LME and its sister clearinghouse LME Clear rose to $193 million in 2024, up 68% from the previous year.

(By Jack Farchy and Jeremy Hodges)