CFTC fines ConAgra Trade Group for false oil-price maneuver

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Aug. 18 -- The US Commodity Future Trading Commission fined ConAgra Trade Group $12 million for allegedly causing a false crude oil price to be reported in the New York Mercantile Exchange’s crude futures contract 2 years ago.

The fine was part of an order that CFTC issued Aug. 16 as it filed and simultaneously settled charges against ConAgra, which agreed to improve its compliance and ethics program by adding an independent member to its board, forming a compliance committee on the board, and providing enhanced compliance training.

The commission said ConAgra was the first to purchase NYMEX crude futures on Jan. 2, 2008, at the then-historic price of $100/bbl. This caused a non-bona fide price to be reported when crude was trading about 40¢ lower on NYMEX’s electronic market, the order indicated.

The order said one of the group’s traders told ConAgra’s floor broker that morning that the trader was going to be a “madman” if crude prices came within 25¢ of $100. Shortly after the trade was executed, another NYMEX floor trade complained to officials at the exchange that he was holding an offer to sell crude at the better price of $99.90/bbl, which had been violated. NYMEX’s floor committee then took the $100 print down from the exchange’s price register, CFTC said.

ConAgra then instructed its floor broker to buy all the contracts then being offered at $99.90 to—in the words of one ConAgra trader—“keep the $100 print up,” CFTC said in its order.

The commission noted that after getting the then-historic price, a ConAgra trader bragged about it to other traders. He allegedly said that ConAgra instructed its floor broker as long as 3 months earlier that it wanted to get the $100 print, and “we weren’t gonna let that one get away from us.”

The trader also allegedly bragged in an e-mail: “Some people collect art prints. We collect price prints.”

CFTC acknowledged NYMEX’s cooperation in the investigation.

Contact Nick Snow at nicks@pennwell.com.

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