Two employees, including an executive, of the London-based commodities broker Marex Spectron, had warned the firm about the risks of fraud before signing the metal financing deal with French bank Natixis which ended up in a $32 million lawsuit by the bank, according to a Reuters report.
The court documents filled in December revealed that Kevin Nutt, COO of metals at Marex, and Judi Ferrari, a former trader, warned about the potential fraud in November 2016.
“Both Mr. Nutt and Ms. Judi Ferrari … expressed concern that there was a risk of fraud on the warehouse receipts and the underlying nickel,” the documents from Marex insurers noted.
The Controversial Deal
In May 2017, Marex was slapped with a lawsuit by Natixis accusing that the broker had provided fake warehouse ownership receipts for nickel. The receipts were the part of a repurchase agreement, arranged by Marex, between Natixis and a Hong Kong firm.
The bank holds the broker responsible for not verifying the receipts before signing the financing deal.
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It is interesting to note that although none of the parties disputed the claims of the fraudulent receipts, no accusations have been made against anyone for faking it.
Marex, however, rejected all allegations made against it and issued a claim against Glencore unit Access World, which stored the metal. The broker held its ground that it had followed proper verification process and received assurances from Access World about the receipts’ validity.
Natixis also filled a lawsuit against the warehousing company Access World.
“Despite the initial concerns … Mr. Nutt was reassured following a telephone conversation and an email exchange (with Access World),” Marex lawyers stated in the court documents.
Despite the setbacks, Marex is expanding fast in the market. Last year, the company launched a new platform for FX and precious metal spot trading marking its return in the forex trading industry. It has also signed an agreement in December to acquire the customer business of futures brokerage Rosenthal Collins Group (RCG).