CFTC Targets Shipping, Storage in Oil Investigation: "Prosecutions Possible."

[chill_wind]

Michael Greenberger, a former head of the CFTC's Division of Trading and Markets, said the agency is likely to find that some investment banks, hedge funds and wealthy individuals manipulated futures prices. Traders may face prosecution if they reported false prices or made offsetting trades designed to manipulate the market, he said.

``There will be a lot of administrative and criminal litigation before the sun sets on this,'' said Greenberger, who teaches law at the University of Maryland.

Greenberger said that in addition to the pressure caused by consumer furor over record motor-fuel prices, the CFTC may be trying to protect its regulatory turf from the Federal Trade Commission, which has new authority to investigate energy-market manipulation.

``I think everyone is going to be watching to see how serious the CFTC is about this,'' Greenberger said. ``Yesterday's take was that this is very serious.''

CFTC Targets Shipping, Storage in Oil Investigation (Update1)

By Tina Seeley

]May 30 (Bloomberg) -- The U.S. Commodity Futures Commission, the watchdog over the nation's commodities markets, said its investigation of oil trading will include looking at how the flow of crude may have been used to manipulate prices.

``We're particularly looking at storage and shipping and the ability that that might have in any attempted manipulation or manipulation scheme,'' Commissioner Bart Chilton said today in a telephone interview. ``That's not all we're looking at.''

The CFTC said yesterday it's investigating oil trading, the first time it publicized an ongoing probe since 2004. While the commission's acting chairman, Walter Lukken, said this month that he doesn't see manipulation driving up prices, Chilton called the investigation ``the No. 1 thing on our radar screen.'' He said it began after the commission ``saw some things last December that piqued our interest.''

(...)

Higher margin requirements could lead traders to switch to other markets, Lukken said today in an interview. Asked how shipping and storage operations may come into play in the investigation, he said there had been cases in the past of supply being withheld to move prices.

(more)

Last Updated: May 30, 2008 16:48 EDT

Full article:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGzRMmD_b9MA&refer=home


Related DU threads:
Senate Testimony of Michael W. Masters, hedge-fund manager; Food & energy speculation

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=3360517&mesg_id=3364439

US Oil Price Manipulation Investigation Underway- Fox In the Henhouse?

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=3360517&mesg_id=3360517

[chill_wind]

1. Some people heading for the shredder, too late? (Chilton quote)

(...)

``It's not normal for us to talk about this stuff, primarily because the minute you say you're doing an investigation, some people will head for the paper shredder,'' Commissioner Chilton said.

The oil investigation is far enough along that the commission could announce it publicly without hindering its ability to gather information, he said. ``I hope we have something more to say about this sooner rather than later,'' Chilton said.

Chilton didn't elaborate on the December incidents that drew the CFTC's interest. The benchmark tanker rate from the Middle East to the U.S. Gulf Coast surged that month.

[Andy823]

2. I read that yesterdays drop of over $4 a barrel

Was the largest drop in 2 and 1/2 months, and some say it was due to the report coming out about the investigation.

They even came out yesterday and said that the drop in supply had to do with tankers that had "NOT" been emptied yet. Hell this is the way they have been doing their "low" supply crap for years, keeping it on the tankers when they come to check out inventories! Hold he oil on the tankers, show a decrease in inventory, and watch the prices go up! Yesterday they come out and say inventories were down, price started to go up, the news of the investigation comes out and prices drop! I see some "scared" people wondering how to cover the ass on this one!

I hope there is jail time for those who were manipulating prices along with million dollar fines!

[Trekologer]

3. Did you expect different?

What do you expect from an industry that, in the face of hurricane Katrina, started jacking prices before there was even the scent of supply issues and eventually resulted in no wide-spread supply problems. This is also the industry that when grilled about the extortion profits they have been collecting, told congress that they would just raise their prices to protect any profits that the governemnt might tax.

[chill_wind]

4. Hangin's too good for 'em

should some of the bigger players get nailed. Mere millions in fines, they will never even miss.

Michael Greenberger (former CFTC 1997-1999), mentioned in OP, is another who told the Senate this in December 07

"The 2007 Report on natural gas speculation makes clear that the failure to
regulate these markets properly has distorted and sabotaged free market principles. It has
cut those markets off from the moorings of economic fundamentals. It has turned them
into nothing more than casinos serving neither those who need them to hedge for
commercial purposes nor those who wish to speculate based on honest fundamentals."26

http://energycommerce.house.gov/cmte_mtgs/110-oi-hrg.121207.Greenberger-Testimony.pdf

[Canuckistanian]

7. A $million fine means NOTHING to these leaches

They could write that off and never miss a payment on the Ferrari.

Hell, they probably spill more than that at lunches.

[Raster]

9. I hope they are executed. After all, we are in a war and this is blatant profiteering.

An execution or two is just what we need to put the fear of god in the profiteering speculators.

[KelleyKramer]

5. Prison is just a start...

What about restitution for all the money they stole (and are stealing) ?!?

[Canuckistanian]

6. There's a 'watchdog' over commodities trading???

Man, that place must be like a WHOLE BUILDING full of Maytag repairmen.

[chill_wind]

8. ConocoPhillips & Exxon Mobil cooperating; Chevron & BP won't comment..

"Houston-based ConocoPhillips, the third-largest U.S. oil producer, was contacted in the CFTC's investigation and has been cooperating fully, company spokesman Bill Graham said, declining to comment further.

Exxon Mobil, based in Irving, Texas, also has been asked for information, company spokesman Tony Cudmore said. ``But it's our understanding that we are not the focus of the investigation,'' he said.

Chevron Corp. spokeswoman Stephanie Price declined to comment on whether her company, the No. 2 U.S. oil producer, had been contacted by the commission. The San Ramon, California- based company operates oil and refined-products trading desks in Houston, Singapore and London.

(...)

Valerie Corr, a spokeswoman for BP, didn't respond to telephone messages seeking comment. The CFTC reached a record $303 million settlement with BP in October over allegations the London-based company manipulated the U.S. propane market."

Last Updated: May 30, 2008 19:41 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGzRMmD_b9MA&refer=home

Also touches on something fishy in Cushing, Oklahoma..

[lildreamer316]

10. Some RELATED THREADS:

at this link....
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=3360213&mesg_id=3360213

[chill_wind]

11. Thanks for that thread. I kicked it.

It will no longer let me rec it, but I hope people will visit it. Lottsa stuff there!

[lildreamer316]

12. ! I need to compile some more!!

Thanks for staying on top of this!!

[chill_wind]

13. Something's going to blow, I think. CNN is carrying the probe story today

Oil trading probe may uncover manipulation

(...)
The traders now know that someone is looking over their shoulder," said Michael Greenberger, a professor at the University of Maryland and a former CFTC official. "Their phony sales are being watched, and in one day there was the biggest drop in 2 1/2 months."
(...)

http://money.cnn.com/2008/05/30/news/economy/oil_cftc/?postversion=2008053110

[ColbertWatcher]

14. Great post. I guess "enron" has become a verb. n/t