NEW YORK Aug 4 Three oil trading firms and two traders agreed to pay $13 million to settle a U.S. regulator's lawsuit accusing them of manipulating oil markets in 2008 as prices were soaring, leading to more than $50 million of illegal profit.
In the settlement with the U.S. Commodity Futures Trading Commission, Arcadia Petroleum Ltd, Arcadia Energy SA, Parnon Energy Inc, Arcadia trader Nicholas Wildgoose and Parnon trader James Dyer also agreed to a permanent injunction requiring three years of improved record-keeping and oversight, and the hiring of an independent consultant.
The defendants also agreed for three years to limit their trading in some crude oil contracts. None of the parties admitted or denied wrongdoing in agreeing to settle.
Settlement terms were disclosed in a filing on Monday with the U.S. District Court in Manhattan. A settlement in principle had been reached in June after nearly three months of mediation.
Arcadia and Parnon are both owned by John Fredriksen, a Norwegian billionaire.
The lawsuit was filed in May 2011, in the midst of an effort by the Obama administration to assure Americans that rising gas prices were not the result of artificial manipulation.
According to the CFTC, in early 2008 as oil prices were approaching a then-record $100 a barrel, Dyer, of Brisbane, Australia, and Wildgoose, of Rancho Santa Fe, California, built up huge crude oil positions, creating an impression of tight supply, only to soon dump their holdings and collect profits.
The CFTC said Dyer and Wildgoose in January 2008 took big positions in oil futures, and bought millions of barrels of physical crude oil at Cushing, Oklahoma, a major delivery point, despite having no need for the oil.
At one point that month, the traders owned 4.6 million barrels of oil, about two-thirds of the 7 million expected to be available at Cushing at the end of the month, the CFTC said. Dyer and Wildgoose repeated the scheme in March 2008, it said.
Both traders had previously worked at BP Plc.
Fredriksen, the owner of Arcadia and Parnon, has said the lawsuit might have been a bid by U.S. regulators to extract revenge for BP's role in the 2010 Gulf of Mexico Oil spill.
Timothy Carey, a partner at the law firm Winston & Strawn who on behalf of the defendants signed the consent order imposing the penalty and injunction, did not immediately respond to a request for comment.
Arcadia Petroleum has offices in London; Arcadia Energy in Nyon, Switzerland; and Parnon in Rancho Santa Fe. (Reporting by Jonathan Stempel in New York; Editing by Leslie Adler)