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Pechiney SA was a major aluminium conglomerate based in France. The company was acquired in 2003 by the Alcan Corporation, headquartered in Canada.[1] In 2007, Alcan itself was taken over by mining giant Rio Tinto Alcan.

Key Information

Prior to its acquisition, Pechiney grew to be the world's 4th largest producer and developer of aluminium products, employing 34,000 people and operating 320 manufacturing and sales facilities in 50 countries at the time it was purchased by Alcan. The group operated in all facets of the aluminium industry from bauxite mining to the development of sophisticated applications of metal products in addition to international commodities trading and brokerage of the metal on the London Metal Exchange (LME).

Pechiney gained worldwide recognition for its use of electrolysis technology, and was a leader in specialty packaging and aerospace applications.[1]

History

[edit]

The company was founded in 1855 by Henri Merle as a producer of caustic soda at a manufacturing facility in Salindres. Founded as Compagnie des Produits Chimiques Henri Merle the company was renamed in 1897 the Société des Produits Chimiques d'Alais et de la Camargue.

The company first began producing aluminium metal in 1860 using a chemically-based process developed by Henri Sainte-Claire Deville in 1854 and was granted a 30-year monopoly by the French government.

During World War I (1914–18) Tréfileries et Laminoirs du Havre (TLH) acquired a large stake in the Société d'Alais et de la Camargue. This company in turn took control of the Société électrométallurgique de Froges in 1919 to become the Compagnie des produits chimiques et électrométallurgiques d'Alais, Froges et Camargue. Hippolyte Bouchayer represented TLH in Pechiney.[2]

Pechiney had developed a significant presence in Europe in the 1930s and first prospected the American market in 1911 before acquiring a strong foothold there in the 1960s. In the 1954, Pechiney expanded into Africa and subsequently it developed a presence in Australia, Latin America, Greece and Asia.

The corporate name was changed to Pechiney in 1948, after a former influential managing director referred to by the same name, Alfred Rangod Pechiney [fr].

In 1962 TLH merged with the Compagnie française des métaux and became Tréfimétaux.[3] In 1967 Tréfimétaux was acquired by Pechiney and became the copper division of that group, contributing 8% of the group's total.[4]

Brandeis Brokers

[edit]

Brandeis (Brokers) Ltd was a broker and ring dealing member on the London Metal Exchange that operated as a subsidiary of Pechiney from 1981 through 2000, when it was banned from trading by the FSA.[5][6][7] Brandeis was one of the founding members of the London Metal Exchange in 1877.[8] In 2000, the company's customer accounts and trading positions were purchased by Standard Bank London.[9]

See also

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References

[edit]

Sources

[edit]
[edit]
Revisions and contributorsEdit on WikipediaRead on Wikipedia

Pechiney

View on Grokipedia
from Grokipedia
Pechiney SA was a prominent French multinational corporation specializing in aluminum production and , originating from a established in 1855 and evolving into one of Europe's leading aluminum groups before its acquisition by in 2003. Founded as the Compagnie des Produits Chimiques d'Alais et de la Camargue by Henri Merle to produce caustic soda, the company pivoted to aluminum in 1860 using a chemical process, securing a monopoly on French aluminum production for the next three decades. By adopting electrolytic methods in 1897 and merging with Froges in 1921 to form Aluminium Français (AFC), Pechiney expanded its technological edge, producing 80% of France's primary aluminum by 1971 and developing high-quality alloys, semi-finished products like foils and forgings, and innovations in cells used globally. Post-World War II, Pechiney reorganized in 1948 into four divisions: aluminum, electrothermics, chemicals, and mining products, initiating international growth with plants in (1954), (1960), the (1962, 1966, 1970), (1968), and the (1971). A major merger in 1971 with Ugine-Kuhlmann created Pechiney-Ugine-Kuhlmann (PUK), France's largest industrial conglomerate at the time, though it faced challenges from oil crises and rising energy costs in the 1970s. Nationalized by the French government in 1982 amid economic difficulties, it was renamed simply Pechiney in 1983 after divesting non-core steel and chemical units, refocusing on aluminum and acquiring American National Can in 1988 to bolster its division for , healthcare, and markets. Privatized and listed on the and New York stock exchanges in 1995, Pechiney operated 320 facilities across 50 countries with 31,300 employees by , generating €10.7 billion in sales. In July 2003, Canadian firm launched a hostile €3.4 billion bid for Pechiney, valuing it at €41 per share—a 28% premium—and aiming to form the world's largest aluminum and entity with anticipated annual savings of $250 million, despite regulatory hurdles from U.S., Canadian, and authorities. The acquisition was completed by December 2003, integrating Pechiney into , which itself was acquired by Rio Tinto in 2007 for US$38.1 billion, marking the end of Pechiney as an independent entity. Throughout its history, Pechiney was renowned for technological leadership in aluminum corrosion resistance, product development for and automotive sectors, and a paternalistic labor model that enhanced productivity, producing the same output in 1994 with 2.5 times fewer workers than in 1970.

History

Founding and Early Years (1855–1920)

Pechiney originated as a chemical manufacturing venture when chemical engineer Henri Merle established the Compagnie des Produits Chimiques d'Alais et de la in 1855 at the Salindres plant in , , with imperial authorization from to produce caustic soda using the from local . The factory's construction began in June 1855, with operations commencing late the following year, marking an early industrial effort in southern 's chemical sector amid significant local opposition due to pollution concerns. In 1860, the company expanded into aluminum production at Salindres, employing Henri Sainte-Claire Deville's chemical reduction process, which involved treating with and chlorination to yield the metal; initial output reached 505 kg in the first year. This innovation secured a French monopoly on aluminum for approximately 30 years, as Salindres became the world's sole producer, leveraging nearby bauxite and salt resources despite the process's high costs and low yields, often described as akin to goldsmithing in its labor intensity. The monopoly reinforced Pechiney's dominance in France's nascent metal sector, though it faced financial strains from the process's inefficiencies and external pressures, including over 287 lawsuits between 1865 and 1872 over environmental nuisances, resulting in compensations totaling 1,856.60 francs by 1876. By 1889, competition from more efficient electrolytic methods, pioneered by Paul Héroult, rendered the chemical process obsolete, prompting the company to cease aluminum production the following year after a peak output of 2,959 kg. Pechiney reentered the aluminum market in 1897 by acquiring a rival firm and adopting electrolytic production, aligning with global technological shifts. This period's monopoly dynamics in French chemicals and metals underscored Pechiney's strategic pivots amid economic vulnerabilities, culminating in its first international venture in with the establishment of an aluminum plant near Badin, , under French interests via L'Aluminium Français to tap hydroelectric resources.

Expansion and Mergers (1921–1970)

Following the First World War, Pechiney underwent significant consolidation through a key merger in , when Alais et combined with the leading French aluminum producer Froges to create the Compagnie des Produits Chimiques et Électrométallurgiques d'Alais, Froges et (AFC), commonly known as Pechiney in financial circles. This merger unified major domestic players in aluminum production, chemicals, and electrometallurgy, enabling greater and resource sharing amid post-war reconstruction demands. By the 1930s, Pechiney extended its reach into European markets beyond , establishing a notable presence through technology licensing for cells and partnerships in hydroelectric exploitation across the and neighboring regions. The post-World War II era marked a pivotal reorganization for the company. In 1948, AFC restructured into four primary divisions—aluminum, electrothermics, chemicals, and mining products—before adopting the simplified name Pechiney, a nod to its longstanding informal identity and influential former director Alfred Rangod Pechiney. This shift facilitated a multidivisional model inspired by American practices, emphasizing and specialization, while signaling the onset of aggressive international growth to secure raw materials and markets. Concurrently, Pechiney ramped up investments in downstream operations, focusing on fabrication, development, and semi-finished products; this included acquiring independent firms and internal expansions to vertically integrate from to end-user applications like . International outreach accelerated in the mid-20th century, beginning with Africa's establishment in 1954 via the launch of an aluminum smelter at Édéa in (Alucam), leveraging local and hydroelectric resources for integrated production. The saw further diversification, with a 20% stake in Australia's Gladstone alumina refinery in 1962 to access deposits, continued penetration of through equity in Argentine and Brazilian fabrication plants dating to 1947–1948, and entry into via the 1966 opening of the Aluminium de Grèce (ADG) alumina-aluminum complex, securing concessions in the region. Expansions also touched , including exploratory projects and technology transfers, as Pechiney sought to counterbalance European energy constraints with global supply chains. Strategic acquisitions bolstered this growth trajectory. In 1962, Pechiney purchased Howe Sound Inc., a U.S.-based aluminum producer and processor, granting access to North American markets and downstream capabilities in sheet and strip rolling, with the subsidiary later rebranded as Howmet. This move diversified production amid rising global demand. By 1967, Pechiney acquired Tréfimétaux, a prominent French specialist in and non-ferrous metals, integrating it as a dedicated division to broaden beyond aluminum into wiredrawing, laminating, and alloy diversification, thereby enhancing the group's resilience against sector-specific fluctuations.

Nationalization and Restructuring (1971–1995)

In 1971, Pechiney merged with Société Ugine Kuhlmann to form Pechiney-Ugine-Kuhlmann (PUK), establishing France's largest private industrial conglomerate with diversified operations spanning aluminum production, chemicals, , nuclear fuels, and special steels. The merger integrated Pechiney's expertise in metals with Ugine Kuhlmann's strengths in chemicals and , creating a multinational entity that employed over 100,000 people worldwide but faced immediate challenges from disparate business lines and financial instability. This consolidation positioned PUK as a key player in France's industrial strategy, though it ultimately strained resources and halted Pechiney's prior growth momentum. The company's trajectory shifted dramatically in 1982 when the French Socialist government under President nationalized PUK as part of a broader program targeting major industries to address economic and enhance state influence over production. placed Pechiney under direct state control, with government-appointed managers overseeing operations amid a workforce of over 650,000 across the affected groups, and included significant financial support to stabilize the firm, such as approximately $1.6 billion in aid allocated to the five newly nationalized industrial groups between 1982 and 1983. By 1983, the entity was renamed Pechiney, and the government stripped away non-aluminum subsidiaries—including those in chemicals and special steels—to refocus exclusively on primary aluminum production and related core competencies. This restructuring aimed to streamline operations and leverage Pechiney's historical strengths in aluminum, divesting peripheral activities that had diluted profitability during the PUK era. A pivotal expansion occurred in 1988 when Pechiney, through its U.S. subsidiary, acquired Industries for $1.3 billion, thereby gaining control of American National Can (ANC) and establishing Pechiney as the world's leading firm. The deal doubled Pechiney's size, with activities—bolstered by ANC's operations—accounting for about 45% of total sales post-acquisition, while shifting the balance away from pure aluminum toward diversified metals and . This strategic move enhanced Pechiney's global footprint in but also escalated its debt load significantly. The period culminated in 1995 with Pechiney's privatization under the French government's efforts, marking the sale of its state-held shares and listings on both the and New York stock exchanges. This transition, which raised approximately 7 billion francs ($1.43 billion), ended decades of state dominance and positioned Pechiney as a fully private entity focused on competitive restructuring in aluminum and sectors. The privatization reflected broader French policy shifts toward market-oriented reforms, allowing Pechiney to pursue independent growth strategies amid global industry consolidation.

Acquisition by Alcan (1996–2003)

In 1999, Pechiney spun off its ANC packaging division to focus on core aluminum operations, retaining a 45% stake in the new entity before selling it to Rexam PLC in 2000. This move allowed Pechiney to streamline its portfolio amid growing competition in the global sector. A proposed three-way merger involving Pechiney, , and Switzerland's Algroup in 2000 collapsed due to unresolved antitrust concerns from European regulators, who required divestitures that the parties could not agree upon. The failure left Pechiney independent but prompted to proceed with acquiring Algroup alone, reshaping the competitive landscape of the aluminum industry. In 2001, Pechiney launched an aggressive acquisition program aimed at doubling its size by 2005, building on its position as of 2000 with approximately 31,300 employees and €10.7 billion in sales. This strategy sought to expand its primary aluminum production and engineered products through targeted buys, enhancing its global footprint despite market volatility. By 2003, Corporation acquired Pechiney for $4.5 billion in a deal that integrated Pechiney's 34,000 employees and 320 facilities across 50 countries, creating one of the world's largest aluminum producers. The acquisition, cleared by U.S. and European regulators after required divestitures to address competition in markets like beverage can sheet, bolstered 's efficiency and . In 2007, Rio Tinto took over in a $38.1 billion transaction, rebranding the combined entity as and further consolidating control over global aluminum production. The Pechiney-Alcan merger had lasting effects on global aluminum supply chains, enabling greater from mining to finished products and influencing pricing dynamics through reduced fragmentation among top producers. This consolidation supported innovations in sustainable sourcing and , though it also intensified scrutiny on in key regions.

Business Operations

Aluminum and Primary Products

Pechiney's primary aluminum production encompassed the full of the , beginning with , followed by alumina , and culminating in electrolytic to produce aluminum metal. The company secured supplies through operations and partnerships worldwide, converting the ore into alumina at key refineries such as the Salindres facility in , which originated as the birthplace of industrial aluminum production in the country in the 1860s and remained central to Pechiney's capabilities. In Australia, Pechiney held a significant stake in Queensland Alumina Ltd., which commenced operations in 1967 as one of the world's largest refineries at the time, employing 2,800 workers and underscoring Pechiney's role in expanding global alumina capacity. occurred at integrated plants, including those in and international joint ventures like the Tomago Smelter in , established through a 1978 partnership where Pechiney took a majority ownership, achieving an annual capacity of 220,000 tons by 1985 and representing 28% of Australia's output. In the United States, Pechiney expanded its and refining footprint through acquisitions, notably purchasing Inc. in 1962, a major American aluminum producer, which bolstered its capabilities across . By the late 1980s, following the 1988 acquisition of American National Can, aluminum products accounted for approximately 30% of Pechiney's , positioning the company as one of the world's leading primary aluminum producers with substantial market influence. This era highlighted Pechiney's competitive standing, as it produced around 80% of France's total aluminum output in the early 1970s, reinforcing its dominance in the European market. Downstream from , Pechiney engaged in rolling, , and fabrication processes to transform aluminum into semifinished products tailored for high-value industries. These activities supplied alloys and components for applications, automotive parts, and construction materials, leveraging the company's integrated operations to ensure quality and efficiency. By 2003, Pechiney's global network comprised 320 manufacturing and sales sites across 50 countries, enabling seamless progression from raw materials to finished aluminum goods and supporting its role as a vertically integrated leader. Pechiney's aluminum operations played a pivotal economic role in , where it remained the nation's foremost producer, sustaining thousands of jobs in industrial regions and contributing to the country's nonferrous metals sector through its emphasis on primary and transformed products. The company's employment footprint extended internationally, as evidenced by its Australian ventures, while domestically it anchored 's aluminum industry with facilities like Salindres driving long-term regional development.

Packaging and Diversified Activities

Following in 1982 and subsequent , Pechiney divested its chemicals division in 1983, transferring activities to entities such as , , CdF-Chimie, and EMC to refocus on core aluminum operations. This marked a strategic pivot from the conglomerate diversification of the 1970s, when the 1971 merger with Ugine-Kuhlmann had expanded into , chemicals, and other sectors, toward a streamlined emphasis on aluminum production and downstream applications like . Similarly, Pechiney's activities, bolstered by the 1967 merger with Tréfimétaux—a specialist in copper wiring, cables, and related products—were sold to Europa Metalli in 1987, with Pechiney retaining a 20% stake thereafter. The 1988 acquisition of American National Can (ANC), a U.S.-based packaging giant with $5 billion in annual sales and operations in aluminum and containers, propelled Pechiney into global leadership in for beverages, , and consumer goods, accounting for 45% of its manufacturing sales post-deal. This move, executed through the purchase of ANC's parent Industries, expanded Pechiney's footprint to over 100 factories worldwide and balanced its portfolio, with aluminum comprising 30% and other activities 25% of sales. operations targeted markets such as beverage cans and industrial containers, supporting global exports and leveraging aluminum base materials for lightweight, recyclable solutions. Key subsidiaries drove this diversification, including Cebal—established in 1966 as a packaging specialist—and Alltub, whose roots trace to Pechiney and Cebal organizations, producing aluminum squeeze tubes, laminate tubes, aerosol cans, and rigid containers for pharmaceuticals, , , and industrial uses. Cebal operated internationally, with facilities in , (via a 60% stake in Cebal Co. Ltd.), and beyond, contributing to specialty that represented about 20% of Pechiney's total sales by 2000. Pechiney also held minor stakes in non-aluminum sectors, such as rare-earth magnets through the 1980 acquisition of RECOMA Inc., integrated into its UGIMAG division for producing samarium-cobalt and magnets used in high-performance applications. These activities were part of broader downstream diversification but remained secondary. By the late 1990s, amid and cost-cutting initiatives like the 1996 Challenge program—which reduced debt by FFr 10.4 billion—Pechiney spun off ANC in 1999, retaining a 45% stake before selling it to Rexam PLC in 2000, further sharpening its focus until the eventual integration with .

Innovations and Technologies

Key Developments in Aluminum Production

Pechiney initially produced aluminum using chemical methods developed by Henri Sainte-Claire Deville starting in 1860, but these processes were limited in scale and efficiency. In the late 1890s, the company adopted the electrolytic Hall-Héroult process, which revolutionized production by enabling scalable electrolytic reduction of alumina in cryolite baths using carbon anodes, replacing costly chemical extraction and allowing industrial volumes of aluminum. This shift positioned Pechiney as a leader in electrolytic smelting, with early implementations focusing on optimizing cell design for consistent current flow and reduced power loss. Post-World War II, Pechiney invested heavily in alumina refining to secure upstream supply for its smelters, including a 20% stake in Alumina Limited (QAL) in Gladstone, , acquired in 1963. QAL commenced operations in 1967 as the world's largest alumina refinery at the time, with an initial capacity of 600,000 tons per year, processing local via the into high-purity alumina for export and domestic use. This facility, later expanded to over 2 million tons annually, exemplified Pechiney's strategy to integrate refining with , reducing dependency on external suppliers and improving overall production efficiency. In 1956, Pechiney engineers developed a pioneering for continuous strip , which solidified molten aluminum between a rotating and a flexible belt to produce uniform strips directly, bypassing traditional and rolling. This innovation enabled the production of wider coils up to 400 mm and heavier outputs reaching 500 kg, facilitating downstream fabrication into sheets and foils while minimizing material waste and energy use in reheating. The laid the groundwork for patented advancements in , influencing modern continuous casters that scaled outputs dramatically. During the 1970s and , Pechiney advanced efficiency through its proprietary AP series prebake cell technologies, starting with AP18 pots prototyped in 1976 and industrially launched in 1979 at 180 kA. These point-fed cells featured improved magnetic compensation and automated feeding to achieve current efficiencies around 95% and energy consumption of approximately 13 kWh per kg of aluminum, a notable reduction from earlier Söderberg designs exceeding 15 kWh/kg. The subsequent AP30 technology, introduced in 1981 and commercialized in 1986 at over 280 kA, further optimized proprietary cell designs with enhanced configurations and cooling systems, lowering energy use to about 12.5 kWh/kg while maintaining high productivity. These developments were licensed globally, including to in 2003 following the Alcan-Pechiney merger, enabling widespread adoption in over 16 smelters for energy-efficient reduction.

Other Technological Contributions

Pechiney developed specialized aluminum renowned for their enhanced resistance, particularly suited for demanding environments in marine, automotive, and applications. The Sealium alloy, a 5xxx series variant designated as 5383, offered superior resistance to seawater and compared to the standard 5083 alloy, enabling its use in boatbuilding and marine structures without extensive . For , Pechiney Rhenalu produced high-strength such as 7449 and 6056, which provided excellent resistance alongside high toughness, supporting structural components in . In the automotive sector, these contributed to lightweight, durable parts exposed to harsh conditions, emphasizing Pechiney's role in advancing -resistant materials for key markets. Through acquisitions in the 1980s, Pechiney expanded into advanced magnet production, integrating RECOMA Inc. with its UGIMAG division to specialize in rare-earth permanent magnets. This development focused on samarium-cobalt (SmCo) magnets, such as SmCo5 and Sm2Co17, which achieved high energy products and thermal stability for applications in electronics and motors. Later advancements under Pechiney/UGIMAG included neodymium-iron-boron (NdFeB) magnets, enhancing performance in high-demand sectors and establishing the company as a key player in rare-earth magnet technology. Pechiney's contributions to electrometallurgy extended beyond aluminum via its acquisition of Tréfimétaux, which became the group's division and advanced electrolytic refining techniques for high-purity production. Tréfimétaux specialized in electrorefining processes that improved impurity removal and cathode quality, supporting efficient from anodes in industrial-scale operations. These methods enhanced energy efficiency and metal recovery in non-ferrous , broadening Pechiney's expertise in electrolytic applications. In packaging, Pechiney innovated through integration of technologies from subsidiaries like Cebal and American National Can (ANC), pioneering prototype developments in aluminum cans and collapsible tubes. These advancements enabled lightweight, recyclable containers for and consumer products, with ANC's contributions focusing on seamless tube extrusion and integration for improved and barrier . Pechiney's tube technologies set benchmarks for metal-plastic laminates, enhancing product preservation in diverse markets. Pechiney's AP technologies, including the briefly referenced AP18 and AP30 smelter designs, played a pivotal role in global standards through extensive licensing agreements that promoted energy-efficient aluminum production worldwide. By the 1980s, these technologies were licensed to over 20 smelters across continents, reducing specific energy consumption to below 13 kWh/kg and influencing industry benchmarks for potline efficiency and environmental compliance. This licensing model facilitated technology transfer, enabling producers in regions like and to adopt Pechiney's prebake cell innovations for scalable, low-emission operations.

Controversies

Triangle Acquisition Scandal

In November 1988, Pechiney SA, a state-owned French aluminum conglomerate, launched an unsolicited takeover of Triangle Industries Inc., a U.S.-based packaging company, for approximately $1.3 billion, offering $56 per common share—a premium of over 400% above the stock's trading price of around $10.50 in the preceding week. The deal, announced on November 21, 1988, required approval from the French Finance Ministry due to Pechiney's public status, and it aimed to expand Pechiney's presence in consumer packaging through Triangle's subsidiary American National Can (ANC). However, the transaction swiftly triggered an international insider trading scandal when the U.S. Securities and Exchange Commission (SEC) identified heavy pre-announcement trading in Triangle shares, suggesting leaks of confidential merger details and yielding estimated illicit profits of about $10 million. Allegations focused on high-level French government figures providing non-public information about the deal, exploiting Pechiney's ties to the state. Roger-Patrice Pelat, a close friend of President François Mitterrand since their time as World War II prisoners of war, was indicted in February 1989 for receiving inside information; Pelat had purchased 30,000 shares at around $10 each through a Swiss institution, profiting approximately $1.1 million upon the price surge to $56, according to U.S. SEC allegations. Pelat's associate, Isabelle Pierco, faced similar charges for receiving tips from him, having bought 650 shares and earning a $21,200 gain. Alain Boublil, chief of staff to Finance Minister Pierre Beregovoy, resigned on January 20, 1989, amid suspicions that he leaked details to intermediaries like Lebanese financier Samir Traboulsi during negotiations; Boublil denied any involvement. These connections raised concerns over breaches of financial "Chinese walls" separating government oversight from private dealings in state-influenced privatizations. The SEC and France's Commission des Opérations de Bourse (COB) launched parallel investigations, with the SEC alerting French authorities to suspicious trades by entities like Soco Finance SA, which bought 88,000 shares between August and November 1988. Dubbed "Pechiney-gate," the affair—France's first major controversy—plagued the Mitterrand administration, eroding public trust and fueling accusations of Socialist Party corruption, ultimately contributing to the party's 1993 election loss. It exposed regulatory weaknesses, prompting Beregovoy to propose reforms in early 1989 to empower the COB with SEC-like investigative and prosecutorial , including heavier fines. Pelat's death from a heart attack on March 7, 1989, weeks after his , halted aspects of the French probe into his role. In September 1993, a court convicted seven individuals, including Traboulsi (fined 25 million francs, or $4.4 million, with a two-year ) and Max Théret (another Mitterrand associate, fined 2.5 million francs), ordering of roughly $9 million in profits from trades in mid-November 1988; no prison terms were imposed. Boublil was acquitted despite prosecution claims of his centrality as an information source. The SEC filed charges in 1997 against seven foreign nationals and two entities, securing $6.5 million in settlements for a fund to compensate affected investors. The underscored conflicts in privatizing nationalized firms like Pechiney, emphasizing the need for robust safeguards against political interference in corporate transactions.

Brandeis Brokers Affair

Brandeis Brokers Ltd. was acquired by Pechiney in 1981 as an international raw materials , serving as the French aluminum producer's primary arm for metals trading on the London Metal Exchange (LME), where it held ring-dealing membership status since the exchange's founding in 1877. The Brandeis Brokers affair emerged in 2000 amid revelations of fraudulent trading practices conducted between 1996 and 1997, primarily involving the deliberate mispricing of orders, front-running client trades, and the misuse of confidential client information to generate illicit profits. These actions targeted clients such as Canadian metals trader , overcharging him on large-volume futures transactions and exploiting his positions for Brandeis's benefit. The scheme involved sham-like manipulations that distorted market pricing, though specific transaction volumes were not publicly detailed beyond Black's claims of losses exceeding £28 million. Regulatory responses were swift and severe. In January 2000, Brandeis voluntarily relinquished its ring-dealing membership on the LME and transferred its client accounts to , effectively closing its trading operations. The UK's (FSA), succeeding the Securities and Futures Authority, conducted an investigation that culminated in December 2001 with Brandeis's full expulsion from authorized financial activities, alongside bans and fines on key personnel: trader Stewart Penfold was deemed "not fit and proper" and fined £5,000, while director Robert Swain received a two-year suspension and £35,000 in penalties including costs. Brandeis was also ordered to pay £1.75 million in compensation to Black and £317,568 toward FSA costs, in addition to a separate LME of £3 million in to the trader. Although U.S. regulators like the (CFTC) initiated probes into related international metal trading manipulations during this period, no specific fines against Brandeis were imposed by the CFTC in connection to these events. Internally, the fallout was significant: Pechiney, as parent company, divested its equity stake in LME Holdings Ltd. in September 2000 and fully shuttered Brandeis's brokerage activities by early 2001, with three senior executives facing charges for their roles in the misconduct. The total settlements approached $7.5 million when converting the combined compensation and awards. The scandal severely tarnished Pechiney's reputation in the commodities sector, occurring just prior to its 2003 acquisition by , and underscored the vulnerabilities of dual-capacity trading on open-outcry exchanges like the LME, prompting broader regulatory scrutiny of metal market integrity.

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