U.S. FIRM INVESTIGATED IN SUMITOMO SCANDAL.
Federal prosecutors started a grand jury investigation Monday into whether a small metals trading company on Fifth Avenue had any role in the copper trading scandal that has cost Sumitomo Corp. at least $1.8 billion.
The trading company, Global Minerals and Metals Corp., and its president, David Campbell, were subpoenaed Monday by the U.S. attorney's office for the Southern District of New York, which is seeking documents and testimony on the company's dealings with Sumitomo and its chief copper trader, Yasuo Hamanaka.
Sumitomo, which buys and sells more copper than any other company in the world, has contended that Hamanaka racked up huge losses through unauthorized trades that were conducted off the company's books.
``Our intention is to cooperate fully, and we are confident that in the course of the investigation, it will be seen that we have done nothing wrong,'' said Peter Haveles, a lawyer for Global Minerals.
A spokesman for the U.S. attorney's office declined to comment.
Separately, John E. Tull, the acting commissioner of the Commodity Futures Trading Commission, said that the agency's investigation of the Sumitomo scandal included Credit Lyonnais, the French bank, a unit of which acted as a broker for Winchester Commodities Group Ltd., of which Sumitomo is a client. Neither Winchester, a British commodities trading firm, nor Sumitomo had memberships on the London Metal Exchange, so Sumitomo's trades were executed by brokers with Credit Lyonnais Rouse.
Global Minerals is also part of the CFTC investigation.
Copper prices evened out Monday, as manufacturers who use the metal sought to lock in prices that had hit a two-year low in the wake of the Sumitomo scandal. Early in the day, there was even some slight upward pressure on prices, though the market did weaken later in the day.
Copper for July delivery closed up 5 cents, to 93.90 cents a pound, in trading on the Comex division of the New York Mercantile Exchange.
While relieved that the market held up, analysts were not predicting any rally in the price of copper in the near term. Many traders were worried that Sumitomo would try to ease out of what is thought to be a large copper position accumulated by Hamanaka, which would be expected to depress prices.
``Even before all this hoopla, the market was in a down trend, and there are still fears that there could be some heavy bouts of liquidation coming up, which will tend to keep a lid on prices,'' said William O'Neill, chief futures strategist at Merrill Lynch.
Patrick Thompson, president of the New York Mercantile Exchange, told Reuters on Monday that the exchange had not received enough information from the London Metal Exchange and other British regulators to determine the impact of the Sumitomo scandal on the Comex but that he had ``no reason to believe that the comforting statements that have been made by the British regulators and the LME are incorrect.''
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|Publication:||Daily News (Los Angeles, CA)|
|Date:||Jun 18, 1996|
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