23 September 2015, News Wires – Federal energy regulators in the US have accused French supermajor Total and two of its traders of illegally manipulating natural gas prices in the US south-west for years, according to a report.
In a brief notification posted on the Federal Energy Regulatory Commission’s (Ferc) website, Total was alleged to have made intentionally losing trades – known as “uneconomic” trading – in order to affect index prices on at least 38 occasions between June 2009 and June 2012, Reuters reported.
Those losses would be offset by larger gains on other related positions, Ferc said. It did not mention any potential penalties or fines.
Total, which is a relatively small player in the US gas market, told the news wire it was convinced its US traders did not commit any of the manipulation alleged by Ferc, and that it has fully co-operated with the regulator.
It is the latest case in which Ferc has focused on so-called “loss leader” or leveraged trading strategies where traders seek to lose money in one market to benefit larger positions in a benchmark or other financial index.
In recent years, Ferc has alleged similar violations by JPMorgan Chase, which paid $285 million in fines in 2013, as well as banking giant Barclays and supermajor BP, which are still fighting the Ferc allegations against them.
The Ferc notice alleged the scheme at Total involved making “largely uneconomic trades for physical natural gas during bidweek designed to move indexed market prices in a way that benefited the company’s related positions,” according to the commission’s notice.
The staff at the Ferc Office of Enforcement issues a notice of alleged violations after it has largely finished its investigation and the subject has had a chance to respond and has not agreed to settle.