High-frequency trader Optiver pays $14 million in oil manipulation case

[Newsjock]

Source: Reuters

U.S. regulators claimed their first victory in a four-year old effort to crack down on oil market manipulation on Thursday, announcing a $14 million settlement with high-frequency trading firm Optiver.

In a ruling that came just two days after U.S. President Barack Obama proposed a renewed campaign against illegal oil trading schemes, the Amsterdam-based company agreed to disgorge $1 million in profits and pay a $13 million civil penalty over allegations it used a rapid-fire tool nicknamed "The Hammer" to influence U.S. oil prices in 2007.

It was the first case brought by the Commodity Futures Trading Commission (CFTC) in its 2008 effort to curb market malfeasance, launched as prices soared toward a record near $150 a barrel in the middle of that year.

The case alleged that traders in Optiver's Chicago office reaped a $1 million profit by engaging in a practice called "banging the close", in which the firm attempted to move U.S. oil prices by executing a large volume of deals during the final moments of trading.

Read more: http://finance.yahoo.com/news/high-frequency-trader-optiver-pays-023628616.html

[russspeakeasy]

1. Only about 899 of these assholes left.

Fine them each the equivalent of $ 40 per barrel that they bought and/or sold. That should be about right.

[Historic NY]

2. Its freaking about time....

[McCamy Taylor]

3. Keep it up!

[gateley]

4. That's great BUT it's a drop in the bucket. And I REALLY think the people involved need to

be charged, too. I don't think pittance fines are going to curb this practice -- still too much money to be made.

[eyewall]

5. How much of this would it take

to see a difference at the pumps?

[zipplewrath]

11. Probably not much

this kind of activity is intended to move VERY short term prices. In this case it was probably intended to create a small loss at the end of the day to ensure a large return on futures contracts. By sometime the next morning, the price had probably settled back down. You'd have to do this VERY frequently to have a sustained effect on the price of gasoline.

[progressoid]

6. Rec.

[KeepItReal]

7. I don't know if it's a drop in the bucket or a major penalty

But I appreciate the effort by the CFTC.

Need more of these...

[TrollBuster9090]

8. I know it's not much, but at least it's a precedent. nt

[Lint Head]

9. Just the price of doing business. They should go to jail.

[intaglio]

10. and, I bet, Optiver's profits were at least 10 times that

none of these pirates will pay a blind bit of attention to this

[siligut]

12. This is huge and needed to be done

Oil manipulation is just organized crime and Obama is doing something about it! Expect more to come, just like with Medicare fraud.

[GliderGuider]

13. Now if we could only charge Mother Nature as well

After all, she's the one keeping us from getting at all our rightful oil, with all this Peak Oil nonsense.

Seriously, the long-term effect of speculators like this doesn't amount to a pinch of squirrel crap next to the geological limits we've been up against for the last seven years.

[sinkingfeeling]

14. I bet this will get no media coverage and the average person will

remain totally unaware of oil price manipulation.

[benld74]

15. BAN it COMPLETELY!

[just1voice]

16. They made $800 million that year, got fined $14 million = worthless political grandstanding

They should have been fined about $400 million and jailed to protect the public. Oops, I said "the public" as if we matter at all.