Dutch trading fund charged with US oil futures manipulation

The US CFTC has charged a Dutch-based global proprietary trading fund, two of its subsidiaries, and three employees with manipulating and attempting to manipulate US petroleum commodities markets.

Jul 24th, 2008

Nick Snow
Washington Editor

WASHINGTON, DC, July 24 -- The US Commodity Futures Trading Commission (CFTC) on July 24 charged a global proprietary trading fund based in the Netherlands, two of its subsidiaries, and three employees with manipulating and attempting to manipulate US petroleum commodities markets.

Optiver Holding BV; subsidiaries Optiver US LLC and Optiver VOF; and employees Christopher Dowson, Optiver US's head trader; Randal Meijer, trading head and supervisor at Optiver US and Optiver VOF; and Bastiaan van Kempen, Optiver US's chief executive, were named in the CFTC's civil complaint filed in US District Court for New York's southern district.

They were charged with allegedly trying 19 times to manipulate light, sweet crude, New York Harbor heating oil, and New York Harbor gasoline futures contracts, which trade on the New York Mercantile Exchange. The attempts were made during 11 days in March 2007, CFTC said.

In at least five of the attempts, the defendants successfully manipulated energy futures contracts and created artificial prices, the federal commodities trading regulator continued. Futures prices were forced lower in three instances and higher in two instances, it said. The scheme produced about a $1 million profit for the defendants, the complaint said.

It said the defendants allegedly used a manipulative scheme commonly known as "banging" or "marking" the close, which involves acquiring a substantial position leading up to the closing period followed by offsetting the position before trading closes. The complaint also charges Optiver and Van Kempen with concealing the scheme and making false statements in response to a NYMEX inquiry, CFTC said.

"These charges go to the heart of the CFTC's core mission of detecting and rooting out illegal manipulation of the markets," said CFTC Acting Chairman Walter L. Lukken. "Although this alleged energy trading scheme last only several days in March 2007, even short-term distortions of prices will not be tolerated by the commission."

The UK Financial Services Authority and NYMEX assisted CFTC in its investigation, he added.

Contact Nick Snow at nicks@pennwell.com.

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