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NEW YORK (Reuters) - Global oil trading firm Arcadia Energy rejected on Wednesday the U.S. futures regulator's claims that its traders had manipulated crude oil markets in early 2008, and said it would fight them in court.
"The CFTC is wrong on both the facts and the law," said Colin Hurley, the Chief Financial Officer of Arcadia, in an e-mailed statement to Reuters.
The U.S. Commodity Futures Trading Commission (CFTC) sued firms and traders including Arcadia and related-firm Parnon Energy on Tuesday, alleging that they carried out an illegal squeeze in U.S. oil markets in 2008, that led to $50 million in illicit profits.
"Arcadia has carefully looked at its WTI crude oil trading in the period from January to April 2008, and retained independent experts to assist in that process," Hurley, who also speaks for Parnon, said.
"In short, our activity involved legitimate and lawful trades at market prices that were dictated by the fundamentals of supply and demand... We look forward to proving this in court."
The CFTC said traders James Dyer of Oklahoma's Parnon Energy, and Nick Wildgoose of Europe-based Arcadia Energy, amassed large physical positions at a key U.S. trading hub to create the impression of tight supplies that would boost oil prices.
Later they dumped those barrels back onto the market, causing prices to fall and racking up profits from short positions they had accrued in futures markets, the suit said.
While the civil suit comes after three years of heightened scrutiny into oil price speculation by the CFTC, it also arrives at a time when President Barack Obama is seeking to reassure Americans he is trying to curb high U.S. gasoline prices and ensure they aren't subject to manipulation.
Lots of civil actions around the future markets have been settled before reaching trial, with many firms agreeing to pay fines without admitting wrongdoing in the past
In this case, Arcadia said it did not expect a settlement to be possible.
"Rather than consent to the resolution of the matter based on allegations that are unjustified and untrue, we accepted that the matter would be adjudicated in the courts," said Hurley.
Additional reporting by Joshua Schneyer in New York; Editing by Alden Bentley and Lisa Shumaker