Arcadia and traders settle oil gaming lawsuit

One of the biggest crackdowns on gaming crude oil markets has been resolved, after global trading house Arcadia Petroleum and two high-profile traders agreed to pay $13 million and be given a three-year limit on trading physical US benchmark crude, in the settlement of a landmark lawsuit over manipulating the price of the commodity in 2008.

The settlement concludes one of the US Commodity Futures Trading Commission’s most ambitious crackdowns on gaming crude oil markets, launched in the wake of the 2008 surge in oil prices that sparked a political outcry.

In 2011, the CFTC alleged that Arcadia, a global oil trading firm largely owned by Norwegian billionaire John Fredriksen, and traders James Dyer and Nick Wildgoose, had made about $50 million by squeezing the oil market, losing money on physical trades in order to reap bigger profits on futures.

Without admitting or denying wrongdoing, Arcadia Petroleum (based in London), Arcadia Energy, Parnon Energy, Arcadia trader Wildgoose and Parnon trader Dyer agreed to a permanent injunction requiring three years of limited trading in West Texas Intermediate crude, and improved record-keeping and oversight.

The lawsuit was filed in 2011. Arcadia had denied the allegations and said it would fight them in court.