EXCLUSIVE U.S. Justice Department probes suspected manipulation of Platts benchmarks -sources

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WASHINGTON, Oct 4 (Businesshala) – The US Justice Department is investigating suspected manipulation of energy pricing benchmarks published by S&P Global Platts, an extension of the agency’s crackdown on misconduct in the global commodity market, according to four people familiar with the matter.

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London-based Platts is a data and news provider focused on energy, metals and agricultural commodities. The company collects data from traders on their bargain prices to determine daily market prices for many physical goods.

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The four men said US prosecutors are investigating suspected manipulative behavior by individual traders when submitting those deal prices for Platts’ price assessment for oil and other energy benchmarks.

People declined to be named as the investigation was not public.

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Sources said that over the past year, US authorities have brought two cases of alleged manipulation of Platts’ oil benchmarks by traders in two different companies, but prosecutors are now probing similar behavior across the market.

A previously unreported, industrywide investigation has opened a new frontier in the Justice Department’s crackdown on fraud, bribery and manipulation in the commodity market, raising the stakes for traders and companies globally who trade billions of dollars worth of contracts per day. Let’s use Platts benchmark. .

Sources said prosecutors are focusing on the behavior of the traders and have given no indication of suspected wrongdoing by Platts.

In response to a request for comment by Businesshala, Platts said it conducts reviews to ensure the integrity of its price assessments. Dave Arnsberger, global head of pricing and market insights for S&P Global Platts, said Platts publishes the data and correspondence used to determine price valuations and provides this data to regulators when requested.

“We have spoken with US and global executives across a full range of markets for many years,” Arnsberger said.

He declined to comment on any possible investigation.

A Justice Department spokesman declined to comment.

Commodities Scrutiny

Over the past decade, authorities globally have imposed multi-billion dollar fines and criminal charges against banks and traders for rigging global benchmarks, the most infamous being the London Interbank Offering Rate.

While US criminal authorities pursued cases against benchmark-rigging energy traders in the 2000s, in the years that followed, the domain of civilian agencies, including the Commodity Futures Trading Commission (CFTC) and the Federal Energy Regulatory Commission, was largely the domain of commodities. There was market manipulation.

However, since 2019, the Justice Department, working with the CFTC, has intensified its investigation into the commodities market through a specialist unit within its Washington-based fraud division. That entity has developed sophisticated data analysis tools to detect misconduct more quickly, Businesshala informed of Last year.

While the unit initially focused on commodity futures spoofing, a type of futures market manipulation, it now has the tools and expertise to dig into other areas of the market, including industry benchmarks run by price reporting agencies, sources said. said one of them.

The agency has also probed some of the world’s largest energy trading companies, including Dutch trading giant Vitol, for bribery.

That and another recent case identified misconduct with respect to Platts benchmarks.

While settling bribery allegations with the Justice Department in December last year, Vitol also settled related charges brought by the CFTC. As part of that settlement, Vitol paid a civil penalty to the CFTC to settle allegations of attempted manipulation of the Two Plates physical oil benchmark.

Vitol said at the time it was committed to upholding the law and cooperated “extensively” throughout the investigation. The company neither admitted nor denied the CFTC’s allegations.

In March, a former Glencore plc (GLEN.L) oil trader pleaded guilty to Justice Department charges that he had conspired to manipulate the Platts benchmark for one type of oil.

The Justice Department alleged that from September 2012 to August 2016, Emilio José Heredia Colado directed associates to place buy or sell orders during the Platts trading settlement window key to assess the price of fuel oil, court documents show.

The Justice Department alleged that Heredia successfully changed benchmark prices to benefit itself and its employers.

He is cooperating with the ongoing US investigation, officials said in court filings as recently as August.

His lawyer did not respond to requests for comment. Glencore declined to comment.

“In both these cases, regulators did not accuse Platts of wrongdoing or provide any evidence that attempts to manipulate our assessments were successful or that our assessments do not reflect market value,” Platts said in a statement.

Other commodity traders are under investigation by the Justice Department. Energy trader Gunavour Group has said it is being investigated by US officials for corruption in Ecuador after a former employee was convicted of bribery charges in April.

Reporting by Chris Prentiss in Washington and Jody Godoy in New York Additonal Reporting by Clara Denina and Julia Payne in London Editing by Michelle Price and Matthew Lewis

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