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By Eric Onstad
LONDON, March 31 (Reuters) - The London Metal Exchange (LME) imposed a $1.4 million fine on the metals warehouse unit of commodity group Glencore on Friday, for falsifying documents detailing zinc movements from New Orleans.
The LME, the world's oldest and largest market for industrial metals, said Glencore's Access World agreed to pay the fine without admitting any breaches.
The allegations surfaced last June when a complaint filed by zinc purchasers in a U.S. Federal Court alleged that Glencore's warehouse executives ordered workers to falsify documents in New Orleans to manipulate the zinc market.
The complaint was made public after a U.S. judge in Manhattan allowed a private antitrust lawsuit to go forward against two units of Anglo-Swiss Glencore Plc, accusing them of trying to monopolise the market for special high grade (SHG) zinc, driving up its price.
The LME statement did not allege that Glencore was seeking to manipulate the zinc market. "The exchange understands that the primary rationale for the falsified records was to address logistical issues," the statement said.
The 140-year-old exchange said their investigation alleged that from 2010 to 2014 "employees falsified documents, including bills of lading, to give the exchange the impression that zinc had physically moved from the New Orleans delivery point".
During the investigation, Access World said it had encountered logistical issues in New Orleans during that period, according to the LME statement.
Rather than contact the exchange to discuss the issues, senior management allowed customers to leave metal in warehouses while employees allegedly created the falsified records showing the metal had moved, the LME added.
"The exchange reminds the market that it expects its listed warehouses ... to act with integrity at all times," the LME, owned by Hong Kong Exchanges and Clearing Ltd., said in the statement.
Last June, the 87-page complaint by the zinc purchasers alleged that a confidential witness who worked in management for the warehouse company said he was instructed by executives in late summer or early autumn of 2012 to create falsified documents to mask high-volume movements of zinc.
The complaint also alleged that the false documents played a part in manipulating backlogs of zinc waiting to be delivered, which pushed up the zinc premium, a surcharge buyers pay for immediate delivery of physical metal.
In July last year, Glencore changed the name of its warehouse unit to Access World from Pacorini Metals. (Editing by David Evans and Elaine Hardcastle)