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Glencore Faces Legal Heat From Top Global Funds

Shares in commodity giant Glencore dropped over four per cent in early trading this morning after it was revealed some of the world’s biggest investment groups and companies are claimants in the trading house’s ongoing legal battle in London.

Glencore is being challenged by 197 claimants, including sovereign wealth funds such as GIC, Norges Bank, and Oman Investment Authority, pension funds like Scottish Widows and Ontario Pension Board and strategies managed by companies including Abrdn, Fidelity, HSBC, Invesco and Legal and General.

The claimants have holdings totalling more than £3.7bn in the Swiss miner.

All participants in the legal action bought shares in Glencore at the time of the company’s listing on the London Stock Exchange or during its merging and have alleged the prospectuses contained “numerous untrue and misleading statements”.
They believe these misstatements arose from “Glencore’s failure to disclose that bribery, corruption and fraud was prevalent in the business activities of key operating subsidiaries”.

As a consequence, they argue they suffered loss as a result of “untrue statements” and “omissions” in Glencore’s 2011 prospectus for its listing on the London Stock Exchange and prospectus for its merger with Xstrata in 2013.

Claims were first tabled in the High Court last October, focusing on a common set of allegations covering six legal cases and three examples of alleged unlawful conduct.

This includes its oil trading business in Africa and South America and a fuel oil price manipulation scheme in the US, where Glencore made admissions of bribery and market manipulation last year to settle international investigations,

The Swiss company agreed to plead guilty to a series of charges in return for paying £790m in fines and forfeitures in the US, £280m in the UK and £32m in Brazil.

The legal action also features allegations of bribery related to copper and cobalt acquisitions in the Democratic Republic of Congo.

City A.M. has approached for Glencore for comment, which has not yet filed its defence in the case.

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Shares in Glencore were trading at 418p per share, down 4.6 per on the FTSE 100, in late morning trading.

The story was first reported in The Financial Times.

By Nicholas Earl via City AM

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