Goldman, 2 Subsidiaries Sued by Aluminum Buyers

A steel-railings manufacturer and a scrap-metal dealer have joined to sue Goldman Sachs Group Inc. , adding to the Wall Street firm's legal headaches stemming from allegations it manipulated the aluminum market.

Viva Railings LLC and Regal Recycling Inc. accused Goldman and two subsidiaries of hoarding aluminum in warehouses to boost the metal's price artificially, the companies wrote Thursday in their lawsuit in U.S. district court in Manhattan.

The suit is the latest action filed by aluminum buyers as metal warehousing firms' practices have drawn fire from regulators and politicians.

"We believe this suit is without merit and we intend to vigorously contest it," a Goldman spokesman said. "We also note that aluminum prices are down 40% from their peak in 2006."

On Wednesday, Goldman, J.P. Morgan Chase & Co., Hong Kong Exchanges & Clearing Ltd.'sLondon Metal Exchange and Glencore Xstrata PLC were hit with a suit in federal court in Florida. A few days earlier, Goldman and LME were sued in Michigan.

The suit alleges "anti-competitive and monopolistic behavior in the warehousing market in connection with aluminum prices," HKEx said of the Florida suit. "LME management's initial assessment is that the suit is without merit and LME will contest it vigorously."

A spokesman for Glencore Xstrata had declined to comment on the suit; a spokesman at J.P. Morgan said the action had no merit. Both the LME and Goldman also said the Michigan suit was "without merit."

The U.S. Commodity Futures Trading Commission and the Department of Justice have opened preliminary probes into the warehouse logjams. Last month, a U.S. Senate banking committee held a hearing to explore whether banks' roles in metals warehousing affected prices.

Viva Railings is a Lewisville, Texas-based maker of railings. Regal Recycling is based in Howell, Mich.

The two aluminum buyers sued Goldman and affiliates GS Power Holdings LLC and Metro International Trade Services LLC. Metro, which Goldman bought in 2010, runs metals warehouses in Michigan, Illinois, Alabama, Ohio and Louisiana, according to the suit.