Optiver accused of energy price manipulation

Sandy Shore, THE ASSOCIATED PRESS

DENVER - Federal regulators accused a Dutch trading firm, its chief executive and two other top employees Thursday of manipulating energy futures contracts on the New York Mercantile Exchange.

The U.S. Commodity Futures Trading Commission alleged Optiver Holding BV attempted to manipulate light sweet crude oil, New York Harbor heating oil and New York Harbor gasoline futures contracts during March 2007.

The defendants tried to manipulate prices 19 times and succeeded in causing artificial prices on five occasions, earning about $1 million in profit, according to a complaint filed in U.S. District Court in New York.

Regulators asked a judge to impose monetary penalties, restitution and other restrictions. A telephone message seeking comment was left at the company's Chicago office.

In addition to Amsterdam-based Optiver, the complaint named Optiver US LLC of Chicago; Optiver VOF, also of Amsterdam; chief executive Bastiaan van Kempen of Chicago; Christopher Dowson of Chicago, a head trader; and Randal Meijer of Chicago, who heads trading and is a supervisor of Optiver and Optiver VOF.

Regulators said the defendants' trading strategies succeeded just five times: March 2, 2007 for New York Harbor gasoline; March 16, 2007 for light sweet crude oil; March 16, 2007 for New York Harbor gasoline; March 19, 2007 for light sweet crude oil; and March 20, 2007 for heating oil.

The complaint was filed just days after the U.S. Congress began acting on legislation that would require the CFTC to set limits on trading in oil markets by investors and speculators. It would also close a loophole that allows speculators trading on the London oil market to escape scrutiny by U.S. regulators.

The futures contracts at issue are governed by "trading at settlement" guidelines. Parties agree at the start of such a contract that the price will be the day's settlement price plus or minus an agreed-to differential.

A trader can profit by buying or selling such contracts and making money on the price difference, the commission said.

Optiver executives were accused of accumulating a large position in such contracts and trading them in the opposite direction just before or during the closing bell "to improperly influence and affect the price of futures contracts in a desired direction," the complaint said.

During a news conference in Washington, D.C., Stephen Jay Obie, acting enforcement director of the commission, said the investigation had been in the works for some time.

"This is not a politically motivated case," he said. "What we are going after are manipulators of our marketplace."