Odd trades cost broker $10 million

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LONDON | PVM Oil Associates, the world's biggest over-the-counter oil brokerage, said it lost nearly $10 million this week because of unauthorized trades that caused a temporary spike in Brent crude markets.

PVM said in a statement late Thursday that it was investigating the trades, which drove up the price of Brent futures by more than $2 in one hour early Tuesday. It did not identify the trader involved in the transactions.

ICE Futures Europe, the exchange that handled the trades, said Friday that such incidents would be investigated as a matter of course, but declined to comment specifically on this case.

The Financial Times reported that futures contracts for 16 million barrels of oil changed hands in one hour, compared with a typical volume of 500,000 barrels.

PVM said the trading had been reported to the Financial Services Authority, but the government agency declined to say Friday whether it was investigating.

David Peniket, president of ICE Futures Europe, said unusual trading activity is always investigated.

"There are a range of procedures that are followed to look at trading patterns, price movement and levels of activity," he said. "Where appropriate, action will be taken."

A statement issued by PVM's managing director, Robin Bieber, said that "as a result of a series of unauthorized trades, substantial volumes of futures contracts were held by PVM."

"When this was discovered, the positions were closed in an orderly fashion," the statement said. "PVM suffered a loss totaling a little under $10 million."