United States investment bank Goldman Sachs is understood to have been hired by loss-hit Japanese trading house Sumitomo to help it unwind substantial copper positions run up by disgraced head trader Yasuo Hamanaka.
The losses, now estimated at US$2.6 billion after the unauthorised trading, are believed to have left Sumitomo with substantial long positions in copper, which it will now have to sell at mostly unprofitable prices.
Yesterday, Goldman admitted it was doing work for Sumitomo, although it did not disclose the nature of the work, and moved to rebut any criticism that its role was in conflict with the regulatory authorities conducting probes into the affair.
'Since the beginning of our assignment for our client, Sumitomo Corp, we have worked closely with regulators on both sides of the Atlantic,' European media relations director David Woods said.
'We are not in conflict with any authority.' The question of how much copper is still held by Sumitomo in London Metal Exchange warehouses has been the subject of much debate.
Last week, Canadian metals dealer Herbie Black, whose dealings in the market have been credited with forcing Sumitomo to reveal the extent of its losses, said he thought at least 500,000 tonnes of Sumitomo copper, worth about $1 billion, was still outstanding. It is thought that Goldman has managed to unwind all the copper.