US authorities are suing two John Fredriksen-controlled oil trading outfits for allegedly manipulating crude prices in 2008.
The US Commodity Futures Trading Commission (CFTC) said the two had amassed “large physical positions at a key US trading hub to create the impression of tight supplies that would boost oil prices.”
Later, they are said to have dumped those barrels back onto the market, causing prices to crash and racking up profits of $50m from short positions they had accrued in futures markets.
The lawsuit says that the CFTC may seek damages of as much as triple the monetary gains derived from the illicit trading violations, among other potential fines and injunctions.
In the past, the CFTC has had a hard time winning manipulation cases, although US financial reforms last year gave it broader powers to get tough.
The CFTC said the traders aborted the trading strategy after April 2008, when they learned of regulators’ investigations.
Just months later US oil prices surged to a record $147 a barrel, then crashed to nearly $30 a barrel by the end of the year.
California-based Parnon Energy and London-based Arcadia Petroleum are both subsidiaries of John Fredriksen’s Cyprus-based investment company Farahead Holdings.
