DOJ, CFTC Investigating Iron Ore Trader Radiant World’s Deals
(Bloomberg) -- The Justice Department and a US financial regulator are probing transactions around Radiant World, the private firm that has rapidly risen to become one of the world’s largest iron ore traders, according to people familiar with the matter.
Justice Department officials are looking into Radiant World’s business amid concerns that it provided banks with falsified documents related to iron ore trades, said the people, who asked not to be identified discussing a confidential matter. The Commodity Futures Trading Commission is also examining trades involving the company and its creditors, some of the people said.
Radiant World said Thursday it hasn’t been contacted by the agencies nor has it been made aware of any investigation. The company has previously denied wrongdoing and said it “conducts its business to the highest commercial and legal standards.”
Radiant World hasn’t been accused of wrongdoing and investigations don’t always lead to charges.
A representative for the Justice Department didn’t respond to a request for comment. A spokesperson for the US attorney’s office for the Southern District of New York declined to comment.
Radiant World has been under pressure in recent weeks as a number of its counterparties and creditors step back from doing business with it. Bloomberg previously reported that Vitol Group and Cargill Inc. had stopped trading with Radiant World and creditors were reviewing their exposure after companies became concerned the iron ore trader had provided banks with falsified documents.
The documents in question came to light when banks started contacting Radiant World’s counterparties to check invoices the company had used to raise financing. In one instance, invoices for iron ore trades with Vitol were used by Radiant World to raise financing with Intesa Sanpaolo SpA. However, when Intesa checked the details of the invoices with Vitol, it was told by Vitol that some of the underlying trades did not exist, Bloomberg reported last month.
US bank Jefferies Financial Group Inc., which is a creditor to Radiant World through its Point Bonita fund, has also been reviewing its exposure to the company and has found some discrepancies in the documents underpinning its lending. Bloomberg previously reported that Jefferies believed at the time the underlying trades were valid.
Radiant World’s ascent in recent years has been supported by hundreds of millions of dollars in credit lines from a network of banks and credit funds, which have in many cases been backed by documents such as invoices and shipping receipts. Traders like Radiant World frequently rely on credit from a wide range of suppliers, customers and financiers to handle huge quantities of goods whose value often dwarfs their own net worth.
Owned by Pinkesh Nahar, Radiant World is little known outside of the industry but has become a significant participant in the iron ore market. The company started out in 2003 and was initially focused on exporting iron ore from India but has since expanded globally with offices from Singapore and Shanghai to Geneva and Stamford, Connecticut.
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