The London Metal Exchange (LME) today announced a settlement of a disciplinary action against Pac Global Services Spain S.A.U. (PGS), which includes a financial penalty of £250,000.

Following an investigation by the LME, the Enforcement Committee of the LME instructed that disciplinary proceedings be instituted against PGS in respect of breaches of the Warehouse Agreement.

In January 2023, the LME conducted a site visit to Warehouse A, a shed in PGS’s Rotterdam operation, and identified that three nickel Warrants had been intentionally loaded out of Warehouse A and sent to a non-LME approved facility within the same Delivery Point, while the metal continued to be listed as Cancelled Tonnage in LMEsword.

The LME has found that this incident breached clauses 3.2 and 6.3.2 of the Warehouse Agreement.

The Investigation also found inadequacies with PGS’ bagging, labelling and storing of bagged nickel Warrants, and the written processes and training provided by PGS in relation to these activities. In particular, the LME identified that a nickel bag had been labelled with the incorrect brand, which is a breach of Regulation 6.1(d) of the Special Contract Rules.

The LME also identified that there were a small number of damaged nickel bags, with the damaged bags originally being identified within PGS’ independent third party audit report which was produced prior to the Investigation, however the issue was only rectified once the LME became aware of the issue during the Investigation. The failure to re-bag the damaged nickel bags, particularly in circumstances where PGS was aware of the issue and did not promptly resolve it, breached clauses 11.1 and 11.6 of the Warehouse Agreement.

Furthermore, the Investigation also found that PGS had inadequate written processes and procedures, and training provided to its staff and its agent’s staff, in relation to the storage, handling and delivery out of bagged nickel which breached clauses 11.1 and 11.8 of the Warehouse Agreement.

PGS engaged an agent to operate Warehouse A, with the agent also being instructed to conduct periodical warehouse inspections of Warehouse A as required by clause 7.4.1 of the Warehouse Agreement. However, as written records were not retained of the inspection, as required by the Warehouse Agreement, PGS breached 7.4.2 of the Warehouse Agreement.

During the Investigation, the LME identified in February 2025 that there were 62 copper Warrants which were being stored in an open yard outside of an LME-listed warehouse in Kaohsiung, Taiwan. Once this incident was identified by the LME, the 62 Warrants were immediately moved inside an LME-approved shed.

However, the storage of metal on Warrant outside of an LME approved shed is an egregious breach of the Warehouse Agreement, particularly clause 2.2.2(iii) of the Warehouse Agreement, and as such the financial penalty reflects this.

Prior to the institution of disciplinary proceedings, the LME and PGS agreed a settlement in which PGS agreed to pay a financial penalty of £250,000 in respect of the Incidents.

In agreeing the settlement, the LME took account that PGS has taken remedial steps to minimise the risk of instances, similar to the incidents, from re-occurring.