The LME Investigations team is responsible for the investigation of suspected LME Rulebook (PDF) and/or relevant notice breaches.
Investigations are conducted by the LME Market Surveillance investigations team with the assistance of LME Legal.
Investigations are a fact-finding process consisting of the LME requesting and receiving information from members and may include interviews being conducted with relevant personnel.
The opening of an investigation does not automatically mean that the LME has decided at the outset that a member has breached an LME rule or provision within a notice and should therefore be subject to disciplinary action. An investigation is a formal fact-finding process which enables the LME to gather information to determine whether a breach of the LME Rulebook (PDF) or notices has occurred.
Commencement of an investigation
The LME will send a notice of investigation (NOI) and request for information (RFI) to any member who is under investigation.
Investigations vs surveillance enquiries
Investigations should not be confused with routine day-to-day surveillance enquiries. While a member may receive surveillance enquiries, if they have not received an NOI, it means that the enquiries are part of daily LME Market Surveillance team monitoring activities.
NOI and RFI
The purpose of an NOI is to inform a member of the basis upon which an investigation has been commenced (ie what obligation(s) as contained within the LME Rulebook (PDF) and/or notice(s) the LME considers a member might have breached).
An NOI and RFI provides:
(i) an overview of the matter which gave rise to the LME deciding to commence an investigation,
(ii) a summary of the potential LME Rulebook and/or notice breaches; and
(iii) a series of questions.
An NOI and RFI can vary in length and complexity depending on the matter that is under investigation.
After the LME receives and analyses the member’s response to the initial NOI and RFI, further information may be required, which the LME will request through a further RFI(s).
Communication during an investigation
Following receipt of a member’s response to the initial NOI and RFI, the LME will endeavour to provide updates to members at least every two months.
This may be in the form of:
- an email update from the lead investigator, explaining where the LME are in the review process
or
- a further RFI
If for whatever reason, the LME does not provide an update every three months, members are welcome to request an update from the lead investigator. Members should consider the lead investigator to be the LME staff member that sends the NOI, unless stated otherwise.
Length of investigations
Timelines for investigations will vary depending on the nature, scale and complexity of the matter under investigation.
It is possible that more complex investigations, particularly those that require multiple rounds of information requests, may last in excess of 18-24 months. Investigation timelines can also depend on the completeness of the information and documentation provided by a member.
Should a member require clarification on any of the questions or supporting documentation, they should contact the investigations team prior to submitting a response so that clarification can be provided.
Stages of an investigation
Please see a summary of the stages of an investigation below:
Cooperation
The investigation process relies on the cooperation of the relevant member to enable the LME to gather all the information that it requires to consider whether a breach of a member’s obligations under the LME Rulebook (PDF) and/or notice has occurred.
Conclusion of an investigation
At the end of the information gathering stage of the investigation, the LME prepares an investigation report for the LME’s Head of Enforcement. This report is an internal LME document and is not shared with the member under investigation.
The investigation report contains:
- A summary of the information obtained from the member during the investigation.
- A recommendation as to whether a member appears to have breached a rulebook or notice obligation, based on the information obtained during the investigation.
- An assessment on the severity of the breach (if applicable).
- Any mitigating information provided by the member or remedial action they have taken.
- An assessment and recommendation as to whether the LME should commence disciplinary proceedings.
Possible outcomes
It is important to note that a recommendation to commence disciplinary proceedings is not the only recommendation that can be made. Other recommendations may include that the investigation be closed or that the member undertake certain prescribed remedial action(s).
Having considered the report, the Head of Enforcement may or may not recommend to the LME’s Enforcement Committee that disciplinary proceedings should be commenced.
Communication at the conclusion of an investigation
Closing a case
If the Enforcement Committee decides that a case should be closed, this decision will be communicated to the member in a letter from the Head of Market Surveillance.
Commencing disciplinary proceedings
If the Enforcement Committee decides that disciplinary proceedings should be commenced, the LME will typically seek to settle (on a without prejudice basis) with a member instead of commencing disciplinary proceedings.
If settlement cannot be agreed between a member and the LME, the LME will commence disciplinary proceedings before a disciplinary panel.
Communication of an outcome
The outcome of an investigation, whether by settlement or disciplinary proceedings, will be notified to the market by way of notices.
Member Oversight functions
Member Audit Programme
Referral Committee
