Key Takeaways
- • Elliott Investment Management sued the London Metal Exchange for $456 million, claiming the exchange breached UK competition law by cancelling $12 billion in nickel trades during the March 2022 crisis.
- • Multiple hedge funds including AQR Capital Management, DRW Commodities LLC, and Pala Investments Ltd filed separate lawsuits demanding over $100 million in damages but have now withdrawn their claims following the UK Supreme Court's rejection of Elliott's appeal.
- • The LME cancelled trades following a short squeeze that caused extreme price volatility, a decision the exchange defended as necessary to prevent a "death spiral" in the metals market but which UK courts ultimately ruled was lawful.
- • The Financial Conduct Authority imposed a £9.2 million ($11.9 million) fine on the LME in March 2024 for inadequate systems and controls during the crisis, despite courts finding the exchange's actions legal.
- • Elliott and Jane Street made interim payments exceeding £4 million in 2024 to cover the LME's legal costs, with the Supreme Court's decision in February 2025 effectively concluding Elliott's high-profile case.
Summary
The 2022 nickel crisis at the London Metal Exchange has concluded its major litigation phase following the UK Supreme Court's refusal to grant Elliott Investment Management an appeal against the exchange's decision to cancel approximately $12 billion in trades. Elliott had pursued an aggressive legal strategy, suing the LME for $456 million and alleging breaches of UK competition law stemming from the March 2022 incident, when a short squeeze drove nickel prices to unprecedented levels and forced the exchange to halt trading and void completed transactions.
Multiple hedge funds, including AQR Capital Management, DRW Commodities LLC, and Pala Investments Ltd, had filed parallel lawsuits demanding over $100 million in aggregate compensation for losses sustained when the LME cancelled their trades. These funds had strategically paused their legal proceedings pending the outcome of Elliott's more prominent case. Following the Supreme Court's decision to deny Elliott's appeal—effectively ending that litigation—the other funds subsequently discontinued their claims, according to court filings and sources familiar with the matter. The LME's annual report, filed in February 2025, stated that the Supreme Court's decision "effectively brings an end" to the Elliott case.
The LME has consistently maintained that cancelling the trades was a necessary protective measure to prevent systemic harm to the metals industry. Exchange officials argued that allowing the trades to settle would have triggered a "death spiral" resulting in widespread bankruptcies across the sector. UK courts ultimately validated this position, ruling that the LME acted lawfully in its decision-making. However, regulatory scrutiny remained separate from the civil litigation. The Financial Conduct Authority fined the LME £9.2 million ($11.9 million) in March 2024, determining that the exchange had operated with inadequate systems and controls during the crisis period—a finding that did not equate to illegality but signalled deficiencies in operational oversight.
The cost of defending the litigation proved substantial. Court filings reveal that Elliott and Jane Street made interim payments totaling over £4 million in 2024 alone to cover the LME's legal expenses. With the Supreme Court's refusal to hear Elliott's appeal and the subsequent withdrawal of claims by other hedge funds, the major legal challenge to the LME's crisis management has concluded without additional compensation flowing to the affected traders.
Multiple hedge funds, including AQR Capital Management, DRW Commodities LLC, and Pala Investments Ltd, had filed parallel lawsuits demanding over $100 million in aggregate compensation for losses sustained when the LME cancelled their trades. These funds had strategically paused their legal proceedings pending the outcome of Elliott's more prominent case. Following the Supreme Court's decision to deny Elliott's appeal—effectively ending that litigation—the other funds subsequently discontinued their claims, according to court filings and sources familiar with the matter. The LME's annual report, filed in February 2025, stated that the Supreme Court's decision "effectively brings an end" to the Elliott case.
The LME has consistently maintained that cancelling the trades was a necessary protective measure to prevent systemic harm to the metals industry. Exchange officials argued that allowing the trades to settle would have triggered a "death spiral" resulting in widespread bankruptcies across the sector. UK courts ultimately validated this position, ruling that the LME acted lawfully in its decision-making. However, regulatory scrutiny remained separate from the civil litigation. The Financial Conduct Authority fined the LME £9.2 million ($11.9 million) in March 2024, determining that the exchange had operated with inadequate systems and controls during the crisis period—a finding that did not equate to illegality but signalled deficiencies in operational oversight.
The cost of defending the litigation proved substantial. Court filings reveal that Elliott and Jane Street made interim payments totaling over £4 million in 2024 alone to cover the LME's legal expenses. With the Supreme Court's refusal to hear Elliott's appeal and the subsequent withdrawal of claims by other hedge funds, the major legal challenge to the LME's crisis management has concluded without additional compensation flowing to the affected traders.
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