- The Washington Times - Friday, July 25, 2008

The U.S. Commodity Futures Trading Commission, under pressure from Congress to police markets in the wake of record energy prices, accused Optiver Holding BV of manipulating U.S. energy markets.

The allegations against the Amsterdam-based hedge fund come as the Senate prepares to vote as early as Friday on legislation to curb speculation in energy markets and expand the commission’s authority and staffing.

“Congress is looking for someone to blame,” said Kevin Book, senior vice president for Friedman, Billings, Ramsey & Co. Inc. in Arlington. “The CFTC is trying to make sure it’s not them.”

Crude oil futures reached $147.27 a barrel on July 11 on the New York Mercantile Exchange. Prices have fallen 15 percent since that high mark, dropping to $124.44 a barrel Wednesday, the lowest close since June 4. Crude oil for September delivery rose $1.05 to settle at $125.49 a barrel on the NYMEX Thursday.

The commission took what it called the “extraordinary step” earlier this year of publicly stating it had in December begun a nationwide investigation into trading, transportation, storage and purchase of crude oil. This is the first enforcement action to arise from that investigation.

“Although this alleged energy trading scheme lasted only several days in March 2007, even short-term distortions of prices will not be tolerated by the commission,” Walter Lukken, acting CFTC chairman, said in Washington. A spokesman for Optiver in Chicago couldn’t immediately be reached for comment.

The commission’s complaint claims the Dutch trading firm tried to “bully the market” by buying large volumes of futures contracts to influence prices. The suspected scheme resulted in a $1 million profit to the defendants, the commission said.

The commission said Optiver, along with two of its subsidiaries and three employees, tried on 19 separate instances to manipulate energy futures markets, specifically New York Mercantile Exchange light, sweet crude oil, New York Harbor heating oil and New York Harbor gasoline markets.

At least five of those attempts were successful, “causing artificial prices,” the commission said. The actions forced prices both higher and lower, Stephen Obie, acting director of enforcement for the commission, said at a press conference Thursday.

In two instances, on March 16 and March 19, Optiver was successful in moving the price of light, sweet crude, also known as West Texas Intermediate, up 79 cents and down 49 cents, according to the commission.

Optiver was founded in 1986, and says on its Web site it is the largest derivatives trading group on the Australian Stock Exchange and the Amsterdam exchanges.

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