Metallgesellschaft refining & marketing, Inc.

The case profiles the use of derivatives, mainly futures contracts by Metallgesellschaft Refining and Marketing (hereafter, MGRM), a US subsidiary of Metallgesellschaft AG a large German industrial conglomerate engaged in a wide range of activities, from mining and engineering to trade and financial services. MGRM, one of the most aggressive users of energy futures contracts, reports the largest derivative-related losses ever reported by any firm at any time. At the time of case, many experts, analysts, as well as derivative professionals are trying to find out what was the real reason behind the debacle of MGRM. More generally, the case presents an overview of the risk management technique used by the firm and the stated rational for its large derivative-related losses.