The energy round-trip trading scandal continued to rumble as BP America today paid $100,000 to the US Commodity Futures Trading Commission (CFTC) to settle charges of illegal wash trading. A wash, or round-trip, trade is one that produces neither a gain nor a loss and is done to boost trading volumes.The CFTC found that a former BP trader executed pre-arranged trades for electricity contracts at identical prices on six occasions between April and June 2000. On each occasion, the BP trader and the counterparty pre-arranged the trades over the telephone. They agreed to offset one buy or sell against the opposite one on an electronic trading platform, said the CFTC. The commission also found that BP had caused the reporting of untrue and non-bona fide prices. The culprit’s identity was not stated.
BP is now obliged to co-operate with the commission in its ongoing investigation of related matters. The company neither admitted nor denied the CFTC’s findings under the terms of the settlement.
Several other US energy companies have been involved in round-trip trading. Houston-based Reliant Energy Services was penalised in November 2003. The CFTC fined the company a total of $18 million to settle charges of false reporting, attempted manipulation and wash trades.
And in July 2002, Duke Energy admitted it had conducted 23 wash trades on the Atlanta-based IntercontinentalExchange, while Houston-based Dynegy paid the US Securities and Exchange Commission $3 million in September 2002 over charges it inaccurately accounted for a $300 million natural gas transaction and engaged in wash trades.
More on Regulation
Japanese banks start to ponder how they will cope with new TLAC rules
State watchdogs issue warnings as insurers turn to proprietary index products
Greater flexibility welcomed, but problems may remain for mortgage lenders
FCA investigating delays and handling of mis-selling cases
Sign up for Risk.net email alerts
Sponsored video: MarketAxess
Sponsored video: Tradeweb
Multifonds talks to Custody Risk on being nominated for the Post-Trade Technology Vendor of the Year at the Custody Risk Awards 2014
Sponsored webinar: IBM Risk Analytics
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.