Realcent.org

Red Kite Management Ltd., the world’s largest metals hedge fund, is suing Barclays Plc for alleged market abuse in the copper market that it claims cost the firm at least $850 million between 2010 and 2013.

Red Kite, whose co-founder is the former treasurer of the U.K. Conservative Party, alleges that Barclays allowed staff to share confidential information about its positions with the bank’s proprietary traders on the floor of the London Metal Exchange, according to court documents filed by the hedge fund in the U.K. High Court.

Barclays traders used the knowledge about Red Kite’s positions to profit by placing opposing trades, the fund said in court documents filed in October 2016, but only recently made public. Red Kite alleges the bank "sought to manipulate the LME by ‘ramping’ prices” to manipulate the closing price, a benchmark widely used by traders.

In a separate document, Barclays denied all the claims, saying that it had not mishandled Red Kite’s confidential information.

The legal battle could resonate well beyond the hedge funds and banking community as the allegations center around the valuation of trades in the $150 billion-a-year copper market.