The key question is whether the LME is free to change these rules and/or purchasers are free to use another exchange in response to Goldman's attempt to increase prices. If they are not so free - if, say, the LME's rule here is imposed to be compliant with some CFTC or SEC or equivalent provision - then we are back to where we started.

Conversely, if the participants are free to use another exchange or start a competing one, then this issue is on the level of Zynga spamming Facebook - a dispute between two powerful private parties that will be worked out via LME countermeasures/competition rather than federal regulation.

[1] http://www.reuters.com/article/2011/07/29/us-lme-warehousing...

  Goldman's warehouse business relies on a lucrative 
  opportunity enabled by the LME regulations. Those rules 
  allow warehouses to release only a fraction of their 
  inventories per day, much less than the metal that is 
  regularly taken in for storage.

  The Exchange provides the environment for trading and 
  regulates the operation of the market. It has a statutory 
  requirement to ensure that business on its markets is 
  conducted in an orderly manner, providing proper protection 
  to investors.

  Approved as a recognised investment exchange (RIE) and 
  conforming with UK and other international regulatory 
  requirements, the LME offers, through price and volume 
  transparency and audit trails, a legally safe forum for 
  metals trading. As an RIE, the Exchange comes under the 
  direct jurisdiction of the UK Financial Conduct Authority 
  (FCA).

  Regulation of the market is largely carried out by the LME, 
  while the FCA is responsible for regulating the financial 
  soundness and conduct of LME members' business.

  Beyond this, both the Exchange and its members are subject 
  to regulatory controls and input from various UK bodies and 
  government offices, as well as EU directives. In 
  international trading, rules applied by overseas regulatory 
  bodies such as the US Commodity Futures Trading Commission  
  (CFTC) also have to be taken into account. 

  To ensure the observance of these regulations, the LME has 
  a compliance department under the supervision of the 
  Executive Director of Regulation & Compliance.  

  The Commodity Futures Trading Commission approved new 
  limits on commodities traders. Now analysts want to know 
  what will happen next.

  FORTUNE -- Is the cure for speculation in the energy 
  markets worse than the illness? Futures industry 
  professionals are up in arms over a vote by regulators 
  Tuesday to introduce position limits on hedge funds and 
  other traders, saying it will lead to commodity hoarding 
  and large price spikes in the futures.

  The CFTC decision (the full text is here) places various 
  limits on how much a speculative trader, like a hedge fund 
  or ETF manager, can hold in any of 28 commodity contracts, 
  including energy. The aim is to prevent a run-up like June 
  2008 when oil hit $140 a barrel which ultimately introduced  
  $4 a gallon gasoline at the pumps. The problem is, 
  according to futures analysts, if speculators aren't 
  allowed to buy the futures, they'll buy the physical 
  commodity instead.

  "Eventually you're going to see a shortage, I think it's 
  going to create a disruption in the marketplace. We might 
  get away with it for some time, but if there's a crisis 
  like 2008 you'll see one," Phil Flynn, the energy analyst 
  at PFG Best, a Chicago brokerage, told me this morning (he 
  also lets loose on his morning market commentary). 
 
  Similarly, if less ominously, CME Group (CME) chairman 
  Terry Duffy told CNBC yesterday ahead of the CFTC vote that 
  passage would "encourage manipulation" of the markets.