JPMorgan Reportedly Owned a Bunch of Rocks That Was Supposed to Be $1.3 Million of Nickel

Call it getting nickeled and dimed.

JPMorgan Chase is reportedly the victim of a scandal rocking the world of international metal trading, according to Bloomberg.

The financial services company owned nine "contracts" (i.e., promises to buy or sell certain amounts of nickel at a later date, or futures) of nickel worth about $1.3 million.

Those nine contracts, or portions of nickel, turned out to be bags of (worthless) rocks.

The London Metal Exchange (LME) is a marketplace for things like copper, zinc, and tin and serves as a price setter and helps regulate the trade in general. At one of its approved warehouses in Rotterdam, LME said they received a report that delivery from the facility was just rocks — not nickel. (The LME does not operate warehouses but "approves" them. This warehouse is run by the logistics company, Access World.)

In metals trading, the LME is seen as the gold standard, and the veracity of its metal contracts is "generally viewed as beyond question," Bloomberg wrote.

The issue was first announced by LME on Friday, but the metal exchange did not say who owned the contracts. Bloomberg reported on Monday that the owner of the problematic "nickel" contracts was JPMorgan Chase, citing "people familiar with the matter."

"Something has gone horribly wrong at the LME," wrote industry vet John MacNamara, CEO of Carshalton Commodities, per the outlet.

Nickel is a key material for things like the batteries of electric cars. It's traded on a "commodity market" for raw materials, which include things like coffee and gold. Nickel prices can fluctuate day-to-day, so it's traded on "futures," which is a way to set a certain price to sell it in the future.

Metals like nickel and zinc are often traded as futures or as ETFs. And nickel futures are a way for the metals industry to mitigate price fluctuation. It also is a way for entities in the finance world to make money on trades, Bloomberg noted.

Millions of dollars in transactions, based on the price of a chunk (or contract) of nickel, could, theoretically, happen every day. The fact that this one was based on what turns out not to be nickel has driven people into a panic, Bloomberg noted, with re-weighing going on at LME-approved facilities around the world.

The buck falls on the warehouses in these types of situations. They are responsible for maintaining LME standards.

Access World said the problem "is an isolated case and specific to one warehouse in Rotterdam."

The cause of the issue was not immediately clear.