The Commodity Futures Trading Commission's (CFTC) enforcement division said last week that in addition to the agency's record fiscal year 2007 in terms of awarded monies from all legal action, the last five years have produced an all-time high in manipulation and false reporting cases in the energy markets.
Enforcement actions for its fiscal year 2007, which ended on Sept. 30, resulted in a record total of more than $540 million in civil monetary penalties, restitution and disgorgement from respondents and defendants in actions involving fraud, manipulation and other misconduct.
Of the 41 actions that were filed during fiscal year 2007, the commission said it filed eight actions against hedge funds/pool operators/trading advisors, and three attempted manipulation cases in the energy markets involving Amaranth Advisors LLC (see NGI, July 30a), Energy Transfer Partners LP (see NGI, July 30b) and Marathon Petroleum Co. LLC (see NGI, Aug. 6). However, a question of jurisdiction on at least one of the cases has popped up over the past few weeks between the CFTC and the Federal Energy Regulatory Commission (see NGI, Oct. 1; Sept. 17).
The CFTC noted that the 2007 results cap a five-year period where, staffed with an average of approximately 125 professionals, the CFTC's enforcement division litigated more than 50% of its cases and was awarded in excess of $1.8 billion in civil monetary penalties, restitution and disgorgement.
"The CFTC's impressive enforcement record complements our effective principles-based approach to market oversight by sending the strong message that market malfeasance will not be tolerated," said Walt Lukken, the CFTC's acting chairman.
Noting the record enforcement activity recorded in the energy industry, the CFTC said that since December 2002, it has charged a historical all-time high of 38 companies and 25 individuals in the energy sector for manipulation, attempted manipulation, false reporting and wash trading violations under the Commodity Exchange Act.
The CFTC has thus far been awarded $308 million in civil monetary penalties from a number of the companies and individuals charged in those energy prosecutions. During the same period of time, the CFTC has worked with the Department of Justice to assist in the criminal prosecution of 42 traders and energy companies. The government agency noted that the enforcement division continues its crackdown in the energy markets with dozens of traders, hedge funds and brokerage firms currently under investigation for potential manipulation of various energy products.
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