mrfootball Posted June 29, 2006 Share Posted June 29, 2006 (edited) BP is in the news again...this time they're in trouble for Price Fixing. I think we need more oversight of Energy Commodity traders in general.http://www.chron.com/disp/story.mpl/front/4011116.html Edited June 29, 2006 by mrfootball Quote Link to comment Share on other sites More sharing options...
TheNiche Posted June 29, 2006 Share Posted June 29, 2006 (edited) BP is in the news again...this time they're in trouble for Price Fixing. I think we need more oversight of Energy Commodity traders in general.http://www.chron.com/disp/story.mpl/front/4011116.htmlAs much as I agree in principle with the need for oversight and enforcement of commodity trading operations, there was a case last year where someone came in to work one morning at a big trading outfit in town and exclaimed "I'm going to move the market today!" and was then fired, prosecuted, and imprisoned for having made that pompous statement. Never mind the fact that although he had the ability to shift around tens of millions of dollars, his impact relative to the size of the whole market wouldn't have been enough to budge the price level by even a penny, but that was taking oversight a bit too far.BP ended up losing money on the alleged manipulation since it spent much more money than planned earlier in the month buying up propane and had to hold on to much of it into March, when prices declined. And these folks couldn't even orchestrate a scam effectively...they deserve whats coming to them, if only to rid the system of people who don't have a clue how to trade. Edited June 29, 2006 by TheNiche Quote Link to comment Share on other sites More sharing options...
west20th Posted June 29, 2006 Share Posted June 29, 2006 and was then fired, prosecuted, and imprisoned for having made that pompous statement.Imprisoned for making a stupid statement. I find that a little hard to believe. Any more details on that example? Quote Link to comment Share on other sites More sharing options...
Subdude Posted June 29, 2006 Share Posted June 29, 2006 I peeled the BP story off from the thread about utility prices.I'm not aware of anyone getting prosecuted or imprisoned for making a statement like that. However, if a trader did come out and say something like that, I could see that it would lead to firing. The point isn't at all whether the trader's or company's position is actually sufficient to move the market. The issue is if they act in a way that suggests that what they are trying to do. Illegal behavior isn't excused by a presumptive inability to excecute the illegal activity. Nor is it an excuse, as in the case of BP, that they lost money on the scam. The behavior itself remains illegal. The risk is especially high in markets that are less liquid than NG or oil, such as propane. My immediate reaction to the story is that it is hard to believe that anyone would be stupid enough to admit to it on taped lines. You would think they would have learned some lessons from Enron. In today's environment they need to be like Ceasar's wife: not only not guilty, but above suspicion. Quote Link to comment Share on other sites More sharing options...
TheNiche Posted June 29, 2006 Share Posted June 29, 2006 Imprisoned for making a stupid statement. I find that a little hard to believe. Any more details on that example?Unfortunately no. This was a story told to me last year and I don't remember the specifics, except to say that the story was supposedly written up in the Chronicle at some point. I can reveal my source, however: Mark Haedicke, former General Counsel of Enron's Wholesale Energy Trading Group.Depending on who's reading this, I'll grant that this name might either add or detract credibility from the example...and frankly, I could go either way, myself. On the one hand, he's a really nice guy and has helped me out personally in the past...on the other hand, he put a stop to one Enron insider's attempt to disclose matters relating to the California price gouging and reportedly made out quite well for himself after Enron's collapse. Quote Link to comment Share on other sites More sharing options...
Subdude Posted June 30, 2006 Share Posted June 30, 2006 It is still hard to believe someone would have been imprisoned for that without there being a lot of publicity. Perhaps he exaggerated the story, or left something out. Quote Link to comment Share on other sites More sharing options...
RedScare Posted June 30, 2006 Share Posted June 30, 2006 Two problems with this story. There is not enough said in the trader's statement to be illegal, and two, it would not make it through the system that quickly.A statement like that could easily mean that the trader was going to work so hard that day LEGALLY, that the markets would be moved. It smacks more of boasting of trading prowess than manipulation. Boasting is not illegal. Further, the US Attorney will not spend its precious resources on a single boastful trader, without evidence of a deeper conspiracy. It may come as a surprise to some, but trading floors are full of traders with Texas sized egos, making outrageous claims. They are worse than pro athletes.An employer may well have terminated the trader, if it believed his remarks were unprofessional, or if he had a history of other infractions. But, that statement, on its own, is not enough to land one in federal prison, and definitely not that quickly. Quote Link to comment Share on other sites More sharing options...
TheNiche Posted June 30, 2006 Share Posted June 30, 2006 Two problems with this story. There is not enough said in the trader's statement to be illegal, and two, it would not make it through the system that quickly.A statement like that could easily mean that the trader was going to work so hard that day LEGALLY, that the markets would be moved. It smacks more of boasting of trading prowess than manipulation. Boasting is not illegal. Further, the US Attorney will not spend its precious resources on a single boastful trader, without evidence of a deeper conspiracy. It may come as a surprise to some, but trading floors are full of traders with Texas sized egos, making outrageous claims. They are worse than pro athletes.An employer may well have terminated the trader, if it believed his remarks were unprofessional, or if he had a history of other infractions. But, that statement, on its own, is not enough to land one in federal prison, and definitely not that quickly.Everything you said makes perfectly good common sense to me...especially, as you said, in light of the boastful nature of traders...on the other hand, it wasn't that long ago that public outrage against the whole energy trading industry was extreme in scope. Sometimes people end up as political martyrs...that was Haedicke's point. I recall that Haedicke had also outlined the specific law in his story, enacted in 2002 or 2003 that had a paragraph that was very much open to interpretation. Quote Link to comment Share on other sites More sharing options...
Subdude Posted June 30, 2006 Share Posted June 30, 2006 Everything you said makes perfectly good common sense to me...especially, as you said, in light of the boastful nature of traders...on the other hand, it wasn't that long ago that public outrage against the whole energy trading industry was extreme in scope. Sometimes people end up as political martyrs...that was Haedicke's point. I recall that Haedicke had also outlined the specific law in his story, enacted in 2002 or 2003 that had a paragraph that was very much open to interpretation. Gee, now why do you think Haedicke thinks people end up as political martyrs? That he's been down that path? Seriously, yesterday I was discussing the BP story with some big dogs from a major trading company, and their view was sort of the same, "Oh well, traders will be traders. You really can't listen to what they say." Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.