The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders (34 page)

work for Xstrata,
161
–62

Xstrata stake of,
162
,
163
,
168

Glencore-Xstrata merger

announcement (February 7, 2012) of,
167
–68

banks representing parties of,
168

Blair’s diplomacy of,
175
,
177
,
178

coal price drop and,
170

Davis’s consideration of,
163
–64

discussion in 2007 of,
162

executive pay controversy and,
170
–72

executive pay packages of,
167

Glasenberg’s confidence about,
166
–67

Glasenberg’s need for control and,
165
–66,
177
,
179

initial discussion after Glencore IPO of,
170
–71

Klein’s diplomacy of,
164
–65,
166
,
175
,
177
,
178

nondisclosure agreements signed by,
166

Olsher’s diplomacy of,
172
–73

price ratio for Glencore share offering of,
164
–65,
166
,
170
,
173
–74,
175
,
176
–78

Qatar opposition to,
173
–74

shareholder objections to,
168
,
171
,
172

shareholder reactions to deal of,
179

Xstrata’s stalling on,
157
–58

gold,
7
,
16

Goldman Sachs.
See also
specific officers and employees

aluminum warehousing by,
141
,
227

Andurand’s interview with,
24
–25

Andurand’s work for,
25
–27

Cohn made partner at,
149

Cohn’s benefits to,
150

commodities revenue of,
13

downturn in 2008 and,
43

Ealet’s exploration of selling commodities business and,
154

Gensler’s work for,
93
–94

Glencore-Xstrata merger and,
168

legal inside information for,
142
–43

LME blamed for inefficient aluminum delivery by,
151

LME board seat secured by Cohn and,
148

as market advisor to competitors,
157

Metro International Trade Services purchased by,
142

in
New York Times
story on aluminum warehousing,
154
–55

physical assets ownership by,
68

profitability of aluminum warehousing for,
143
–44

prop trading revenues of,
69

Senate Banking Committee hearing on aluminum warehousing and,
155

sued for violating antitrust laws,
156

Volcker Rule stopping house trading and,
153

Goldman Sachs Commodity Index (GSCI)

embedded costs ruining,
225

food prices and,
16

rise from 2000 to mid-2008 of,
7
–8

sales to individual investors of,
8

sold to Standard & Poor’s as S&P GSCI,
145

as source of client interest,
71

Great Mutual Fund Trap, The,
96

Greenspan, Alan,
94

Griggs, Trey,
122
–23

Heidmar Inc.,
68

Henry Bath & Son warehousing company,
143

Higgs Capital,
229

Hirs, Edward,
209

house trading.
See
proprietary (prop) trading

Hunt brothers, soybean manipulation by,
88
–89

Hunter, Brian,
200
–201

Hurricane Katrina,
75

India, economic growth in,
36

individual commodities investors,
7
–8,
13
–14

Interactive Brokers,
196

IPO of Glencore,
159
,
161

J. Aron & Company,
144
,
145
,
146
,
148
,
149

Jacobson, Paul.
See also
Delta Air Lines

Delta hedging decisions and,
113
,
208
,
212
–14

Delta refinery purchase and,
120

Jaffe, Amy Myers,
98

jet fuel hedging

airlines’ need for,
106
,
107
–8

crude oil used for,
67
,
78
–79

for Emirates by Morgan Stanley,
77
–83,
106

John, Elton,
134

JPMorgan

charged by FERC,
226

Glencore-Xstrata merger and,
168
,
172

Henry Bath & Son warehousing company and,
143

physical commodities business sale of,
226

Klein, Michael,
164
–65,
166
,
175
,
177
,
178

Lazard,
169
,
170
,
180

legal issues.
See
regulation and legal issues

Lehman Brothers, Chapter 11 filed by,
43

Levin, Carl,
85
–87

Lincoln, Blanche,
101

London Interbank Offered Rate (LIBOR) scandal,
190
,
200

London Metal Exchange (LME)

aluminum stockpiling complaints of,
141
,
142
,
144
,
151

Goldman board seat secured by Cohn,
148

minimum load-out rate mandated by,
144
,
152
,
155

sued for violating antitrust laws,
156

Lukken, Walter,
92
–93,
182

Mack, John

commodity traders’ arrogance disliked by,
77

Glasenberg advised about Glencore-Xstrata merger by,
166

negotiation with Emirates management by,
81
–83

Purchase, New York, office visited by,
76

as Rosneft director,
227

Managed Funds Association,
97

Marc Rich & Co.
See also
Glencore International

aluminum dealings by,
147

founding of,
56

joined by Glasenberg,
60

sold by Rich,
57

Masters, Mike,
186
–87

Mattson, George,
207

Medlock, Kenneth,
98

Meister, David

enforcement fines established by,
198
–99

first directions to his CFTC employees of,
191
–92

hired by CFTC,
190
,
191

investigating Arcadia crude-oil case,
192
–93

meager accommodations for,
190
–91

Metro International Trade Services

business at Goldman’s time of purchase,
151

expansion after automakers’ crisis,
151

before Goldman’s purchase,
150
–51

Goldman’s purchase of,
142

lawsuit against,
227

load-out process at,
151
–52

New York Times
story on,
154
–55

profitability of,
143
–44

MF Global Holdings

bankruptcy protection filing of,
197

CFTC focus on,
194

Chilton and scandal over,
197
–98

court order against,
226

customer funds missing,
196
–97,
199

debt and Moody’s downgrading of,
193

Interactive Brokers offer on,
196
,
197

margin calls against,
195

negative rumors and stock drop of,
194
–95

S&P’s consideration of downgrading of,
193
–94

small investors wiped out by,
14

Millennium Management,
229

MillerCoors, complaint to LME by,
155

MIM (Mount Isa Mines),
162

Mohammed bin Rashid Al Maktoum “Sheik Mo,”
81
–83

Monroe, Chris,
206

Moraitis, Thras,
171
–72,
176

Morgan Stanley.
See also
Fan, Jennifer; Mack, John

commodities revenue of,
13
,
66

commodity index business of,
71
–72

commodity traders underpaid,
84

downturn in 2008 and,
43

economies of scale of,
68

Emirates Airline jet fuel hedge of,
77
–83,
106

Fan’s resignation,
84

flexibility toward Glencore of,
53
–54

Glencore-Xstrata merger and,
168
,
172

grace time requested from Glencore and,
52

margin call on Emirates Airline of,
80
–81

physical assets ownership of,
68

physical commodities business sale of,
226
–27

prop trading in commodities of,
68
–70

Purchase, New York, offices of,
65

Qatar offer of stake purchase of,
168

U.S. office eclipsed by London,
65

mortgage trading by Morgan Stanley,
69
–70

Mount Isa Mines (MIM),
162

multinational brokers

controversial tactics of,
11
–12,
54

warehouses bought by,
143

Nomura, Glencore-Xstrata merger and,
168
,
172

Novelis, complaint to LME by,
144

Obama, Barack,
100
,
102

O’Brien, Edith,
195

Olsher, Brett.
See also
Goldman Sachs

advice sought by Glasenberg,
157
–58

Davis explaining cricket to,
163

Glencore-Xstrata merger aided by,
172
–73,
178

X2 Resources advised by,
229

O’Malia, Scott D.,
185
,
189
,
201

Patel, Neel.
See also
BlueGold Capital Management

with Andurand Capital,
228
–29

Andurand’s $8 billion position and,
2
,
3
,
127
,
129
,
130
–31

anxiety about oil price spiral of,
130
–31

crude positions sold by,
129

hired as BlueGold execution trader,
127

savings invested in BlueGold by,
131

warning Andurand of price spiral of,
127

Paulson, John,
16

Peak Oil theory,
8
,
37
,
91

Phibro commodity trading firm,
55
–56

Pirrong, Craig,
98

position limits

CFTC hearing on,
99

CFTC proposal of,
99
–100

CFTC vote on,
189

complaints to CFTC about,
187

congressional angling for,
95

controversy about,
99
–100

Dodd-Frank Act and,
101
,
185

Dunn’s disparagement of,
185

Masters as proponent of,
186
–87

new curbs proposed in 2013 of,
201
–2

Schultz as proponent of,
188

as thrown out by federal judge,
199

trade groups’ suits to halt,
199

White House support for,
100

President’s Working Group on Financial Markets,
90

Prevent Unfair Manipulation of Prices (PUMP) Act,
100

proprietary (prop) trading

to balance commodities hedges,
68
–69

as big moneymaker,
69

Morgan Stanley’s use of,
68
–70

of mortgages,
69
–70

speculation of,
69

Purcell, Philip,
166

Qatar Holding.
See also
Al Thani, Hamad bin Jassim bin Jaber; al-Sayed, Ahmad

demands for Xstrata-Glencore merger terms,
173
–76,
178
–79

described,
161

Glencore-Xstrata merger opposed by,
173
–74

pre-IPO investment offer on Glencore by,
161
,
176

stake purchase offer to Morgan Stanley by,
168

Xstrata investment by,
168
–70

Radhakrishnan, Ananda,
194

RBS Sempra Commodities,
143

Reagan, Ronald,
104

regulation and legal issues.
See also
Commodity Futures Trading Commission (CFTC); Position limits; Speculation’s effect on the market

Arcadia crude-oil case,
192
–93

commodities policing in 2013,
226
–27

Commodity Futures Modernization Act (2000),
94

Commodity Futures Trading Commission Act (1974),
88

Dodd-Frank Act (2010),
101
–2,
103
–4,
153
,
181
,
185

early regulation lacking for derivatives,
94
–95

Gensler’s catch-all approach to,
181
–82

Gensler’s tough stance on,
97
–98

LIBOR scandal,
190
,
200

LME and Goldman sued for violating antitrust laws,
156

LME-mandated minimum load-out rate for aluminum,
144
,
152
,
155

Metro lawsuit,
227

MF Global case,
14
,
193
–98,
199
,
226

Prevent Unfair Manipulation of Prices (PUMP) Act,
100