December 7, 2015 / 8:02 PM / 4 years ago

Total agrees to pay $3.6 million to settle CFTC manipulation charge

(Reuters) - A North American unit of French oil company Total SA and a trader agreed to pay $3.6 million to settle charges of attempted manipulation of the U.S. natural gas market, the U.S. Commodity Futures Trading Commission said on Monday.

A logo is pictured at French oil and gas company Total gas station in Marseille, February 11, 2015. REUTERS/Jean-Paul Pelissier

Total Gas & Power North America Inc and Therese Tran, a gas trader for Total in Houston formerly known as Therese Nguyen, settled charges of attempted manipulation of monthly index settlement prices at four major trading hubs in Texas and elsewhere in the Southwest during monthly settlement periods, the CFTC said.

In addition to the CFTC, the U.S. Federal Energy Regulatory Commission said in September that it was investigating similar allegations against Total.

Officials at FERC said they could not comment on their investigation. Officials at Total were not immediately available to comment on the FERC charges.

The cases are the latest in which federal regulators have focused on so-called “loss leader” or leveraged trading strategies, in which traders seek to lose money in one market to benefit larger positions in a benchmark or other financial index.

In recent years, FERC has alleged similar violations by JPMorgan Chase & Co, which paid $285 million in fines in 2013, as well as Barclays PLC and BP PLC, which are still fighting FERC allegations.

In addition to the fine, the CFTC imposed a bid-week trading limitation on certain of Total’s activity for two years. Bid-week refers to the last five trading days of the month when all financial positions must be closed out.

CFTC found that during bid-weeks for September 2011, October 2011, March 2012, and April 2012, Total, through Tran and other traders under Tran’s direction, attempted to manipulate monthly index settlement prices of gas at four hubs through their physical fixed-price trading.

The hubs were the El Paso Permian Basin, El Paso San Juan Basin, Southern California Gas Co and West Texas Waha.

The CFTC said it found that Total was one of the largest players in the fixed-price market during these periods, with trading accounting for a substantial percentage of the total market by volume at the relevant hubs, even though Total had no material customer business, assets, or transportation at the hubs.

According to the CFTC, Total attempted to affect the monthly index settlement prices to benefit the company’s related financial positions, including basis swap and index swap positions.

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