WASHINGTON, D.C. -- The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of charges against BP Energy Company, an indirect wholly owned subsidiary of BP America, Inc., for engaging in illegal wash trading on an electronic trading platform.
The CFTC order, issued on November 4, 2004, finds that on six occasions between April and June 2000, a former trader for BP Energy executed prearranged trades for electricity contracts at identical prices. On each occasion, according to the order, the BP Energy trader and the counterparty trader prearranged the wash sales over the telephone. They agreed to execute one buy or sell on an electronic trading platform and to execute the opposite buy or sell over the telephone, thus offsetting the initial trade on the trading platform, the order finds. The order also finds that these trades resulted in a financial nullity.
According to the findings in the order, BP Energy violated the prohibition against illegal wash sales as contained in the Commodity Exchange Act (CEA). The order further finds that because BP Energy caused prices to be recorded on the electronic trading platform that were not true and bona fide, the transactions resulted in the reporting of non-bona fide prices. BP Energy’s internal control culture failed to prevent the execution of the wash sales, according to the order's findings.
The order directs BP Energy to cease and desist from further violations of specified provisions of the CEA, pay a $100,000 civil penalty, and comply with specified undertakings, including an undertaking by BP Energy and BP America to provide future cooperation to the Commission in its ongoing investigations and litigation of related matters. In consenting to the entry of the CFTC order, BP Energy neither admitted nor denied the findings made in the order.
A copy of the CFTC order may be found at www.cftc.gov.
The following Division of Enforcement staff were responsible for this case: Kim Bruno, William O. Hoar, Maura Viehmeyer, Laura Gardy, Judy T. Lee, Michael Solinsky, Gretchen L. Lowe, and Richard Wagner.
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