UPDATE: CFTC Levies $12 Million Fine For Early Move To $100 Oil
August 16 2010 - 6:34PM
Dow Jones News
Sometimes it doesn't pay to be first.
The Commodity Futures Trading Commission on Monday levied a $12
million fine on ConAgra Trade Group, the former commodity-trading
arm of ConAgra Foods Inc. (CAG), for a trader's move to purchase
the first-ever contract for $100 a barrel oil in 2008.
The CFTC said it filed and simultaneously settled charges
against the group for causing a "non-bona fide price" to be
reported to the New York Mercantile Exchange on January 2, 2008, in
violation of the exchange's rules.
The settlement stems from the desire of some commodity traders
to grab the historic first contract, or "print," for an oil futures
contract above $100 a barrel. The CFTC says one of the company's
traders said ConAgra had instructed its floor broker to get the
first $100 contract for as long as three months prior to Jan. 2,
2008.
A trader also bragged in an e-mail that, "some people collect
art prints, we collect price prints," the CFTC said.
Shortly after noon on Jan. 2, a floor broker acting on ConAgra's
behalf accepted an offer for the February crude futures contract at
$100, which prompted a complaint from another broker on the floor
of the exchange that he was holding an offer to sell crude futures
at a better price.
In June 2008, ConAgra completed the sale of the trading and
merchandising operations conducted by the ConAgra Trade Group to a
group of investors led by hedge fund Ospraie Management for $2.8
billion. The trading group now operates as The Gavilon Group.
A Gavilon spokesman said, "We are pleased that this matter has
been resolved and believe that this agreement is in the best
interest of our customers and suppliers."
-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155;
jerry.dicolo@dowjones.com
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