Hey, CFTC, ever hear of gold, silver, and JPMorganChase?

This enforcement action isn't even chicken feed -- allegedly only a million dollars in improper profits. The billions stolen by manipulation in the gold and silver markets, while fully reported to the CFTC, remain unnoticed officially.

* * *

Fund Accused of Manipulating Oil Price

By Joanna Chung
Financial Times, London
Thursday, July 24, 2008

http://www.ft.com/cms/s/0/6f4a3170-5994-11dd-90f8-000077b07658.html?ncli...

NEW YORK --The controversy over whether speculators are behind skyrocketing prices of oil deepened on Thursday as US regulators filed charges against a trading fund for manipulating energy futures prices.

The Commodity Futures Trading Commission alleged that Netherlands-based Optiver Holding, two of its subsidiaries and three high-ranking employees manipulated prices of crude oil, heating oil and gasoline futures contracts on the New York Mercantile Exchange at least five times in March 2007.

Laying out its case in a series of e-mails and telephone conversation recordings, the CFTC claimed two of the defendants discussed the "fairy story" they would give to regulators in case Optiver was investigated for manipulation. One trader also allegedly said he intended to trade in a volume sufficient to manipulate prices in Optiver's favour, but not so dramatically that "we're talking about it on CNBC or things like this."

In other e-mails, disclosed in the regulator's civil complaint, traders said they would "hammer," "whack," or "bully" the energy market.

One e-mail said: "You should milk it for right now, as much as you can, because you never know how long this thing is going to last."

The CFTC charges come amid growing pressure on the agency from political leaders who blame oil prices on excessive speculation. Although the regulator's case involves the illegal practice of manipulation, not speculation, lawmakers are nevertheless likely to use it as an example of the impact that financial players could have on the oil market.

Stephen Obie, CFTC's acting director of enforcement, denied that the case was politically motivated. He said the CFTC was "working tirelessly" to pursue every investigative lead involving potential wrongdoing.

Walter Lukken, acting CFTC chairman, said: "Although this alleged energy trading scheme lasted only several days in March 2007, even short-term distortions of prices will not be tolerated by the commission." There are dozens of ongoing probes into the crude oil market as part of a nationwide investigation.

The CFTC claims Optiver made 19 separate attempts over 11 days to manipulate prices, and caused artificial prices five times. According to the CFTC, the defendants forced futures prices lower in three instances and twice forced the prices higher, though only by small amounts in each case. Alledgedly the scheme ultimately allowed the defendants to profit regardless of the direction of the market and resulted in more than $1 million in profits.

The defendants, according to the complaint, used a manipulative scheme, known in market parlance, as "banging" or "marking" the close. It refers to the practice of acquiring big positions right before the close to manipulate prices.

The defendants' goal in trading the large volume of futures was to improperly influence and affect the price of futures contracts, the CFTC said.

Optiver allegedly attempted a similar scheme at least once in ICE Futures Europe, the London-based energy exchange, which some US lawmakers say has a loophole for speculative activity in oil futures. However, Optiver was unable to influence the settlement price on ICE.

Optiver did not respond immediately to calls seeking comment.

* * *

GATA is grateful for financial contributions, which are federally tax-deductible in the United States.