The following is from the CFTC...
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained $14 million in civil monetary penalties and disgorgement pursuant to a federal court consent order against defendants Optiver Holding BV, a global proprietary trading company headquartered in the Netherlands, and two subsidiaries – Optiver US, LLC (Optiver), a Chicago-based corporation, and Optiver VOF, a Dutch company, as well as against then company officers who were responsible for the unlawful trading: Randal Meijer, Bastiaan van Kempen, and Christopher Dowson, the only individual defendant who remains employed by Optiver.
The CFTC’s complaint charged defendants with engaging in manipulation and attempted manipulation of New York Mercantile Exchange (NYMEX) Light Sweet Crude Oil, New York Harbor Heating Oil, and New York Harbor Gasoline futures contracts in March 2007 (see CFTC Press Release 5521-08, July 24, 2008). The complaint further charged Optiver and van Kempen with concealing the manipulation by making false statements in response to an inquiry from NYMEX.
The consent order, entered on April 19, 2012, by Chief Judge Loretta A. Preska of the U.S. District Court for the Southern District of New York, requires the defendants to pay a $13 million civil monetary penalty and $1 million in disgorgement. The order provides for trading limitations on Optiver and prohibits Dowson, Meijer, and van Kempen from trading commodities for 8 years, 4 years, and 2 years, respectively.
“The CFTC will not tolerate traders who try to gain an unlawful advantage by using sophisticated means to drive oil and gas futures prices in their favor,” said David Meister, the Director of the CFTC’s Division of Enforcement. “Manipulative schemes like ‘banging the close’ harm market integrity, and false and misleading statements to exchange officials to cover tracks obstruct the investigative process. As reflected by the court’s order, we will seek significant financial penalties from violators and limitations on their privileges to trade on markets in the United States.”
The CFTC’s complaint alleged that in at least 19 instances in March 2007, the defendants attempted to manipulate prices, and in at least 5 instances, were successful in causing artificial prices. In each instance, defendants intentionally accumulated a large position in Trading at Settlement (TAS) contracts in Light Sweet Crude Oil, Heating Oil, or New York Harbor Gasoline contracts. TAS contracts are priced based on the NYMEX closing price each day. As alleged, the defendants offset their large TAS position by trading futures contracts shortly before and during the closing period, in a manipulative manner. This manipulative tactic, commonly known as “banging the close” or “marking the close,” involves acquiring a substantial position leading up to the closing period, followed by taking offsetting positions in a manner intended to push prices in the manipulator’s favor.
According to the complaint, when the NYMEX began an inquiry into the trading, Optiver and van Kempen made false statements to the NYMEX compliance officials to conceal the manipulative scheme.
The CFTC acknowledges and thanks the NYMEX for its invaluable assistance in this matter. NYMEX’s proactive surveillance program detected the subject trading by Optiver in the Crude Oil, New York Harbor Gasoline, and Heating Oil contracts and contributed to the cessation of the activity alleged in the complaint. NYMEX also provided the CFTC with important information from the NYMEX’s own investigation of this matter, as well as other assistance.
CFTC Division of Enforcement staff members responsible for this matter are Lara Turcik, David Acevedo, Manal Sultan, Lenel Hickson Jr., Stephen J. Obie, and Vincent McGonagle, who were assisted by Ken Danger, Rafael Martinez, and James Outen from the CFTC’s Division of Market Oversight.