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CFTC announces $14 million penalty in oil manipulation case

The Commodity Futures Trading Commission has announced that Optiver Holding BV, a Dutch company, two U.S. subsidiaries and several officers will pay $14 million to settle allegations of manipulating the oil market.

The CFTC’s complaint had charged Optiver with engaging in a practice called “banging the close”: attempting to manipulate the price of futures contracts by taking large positions just ahead of the close of trading.

President Obama has proposed more aggressive measures to prevent oil-market manipulation, including increasing fines to $10 million per violation and putting “more cops on the beat”. 

These proposals are in addition to those provided in the Dodd-Frank Act.  Regulators are now required to prove only that traders acted “recklessly”; previously  they had to prove that they intended to manipulate prices.

The Wall St. Journal reports that the CFTC has one major oil-market manipulation case remaining.  That suit alleges that Swiss commodities trading firm Arcadia Petroleum Ltdunlawfully manipulated and attempted to manipulate New York Mercantile Exchange (NYMEX) crude oil futures prices from January 2008 to April 2008.

 
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