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Old 06-28-2010, 11:56 AM   #454 (permalink)
aceventura3
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Location: Ventura County
What in the heck is "aggressive trading"? Is "aggressive trading" done with a scowl on your face rather than a smile? What is the opposite of "aggressive trading", is that th
e kind of trading you do while playing Monopoly with your kids?

Then we have the concept of "contemporary capitalism" as if "aggressive trading" (whatever it is), is something new! News flash....News Flash... - people who actively trade in commodities seek to make a boatload of money doing it, others use the market to hedge (hedging is actually a positive thing for markets, the term has taken on new meaning lately)

Here is what the company had to say about the trades:

Quote:
April 2003, February 2004 propane trades
BP America has entered a deferred prosecution agreement (DPA) with the U.S. Justice Department under which the company admits that it manipulated the price of February 2004 TET physical propane and attempted to manipulate the price of TET propane in April 2003. The DPA concludes all criminal investigations of BP America on matters related to propane, gasoline, crude oil and other commodity trading.

BP Products North America Inc. also has entered a companion consent order with the U.S. Commodity Futures Trading Commission (CFTC) resolving all civil enforcement matters concerning the company's propane and gasoline trading.

BP America will pay fines, penalties and restitution totaling just over $303.5 million, including $53.5 million to a victim restitution fund, a criminal penalty of $100 million, a civil penalty of $125 million and a $25 million payment to the U.S. Postal Inspection Service Consumer Fraud Fund.

The DPA has a term of three years. Charges will be dismissed at the end of the term following Justice Department determination that BP America has complied with the terms of the DPA. The DPA requires BP America's continued cooperation with the U.S. government investigation of the trades in question.

The DPA will result in the appointment of an independent monitor to make sure BP America has appropriate trading compliance policies and programs in place, that the policies and programs are implemented appropriately, and that they are being enforced. The independent monitor will have authority to investigate and report alleged violations of the Commodity Exchange Act or CFTC regulations and to recommend corrective action.
BP America conducted its own investigation and cooperated with the Justice Department and the CFTC investigations of propane trading in April 2003 and February 2004. The February 2004 TET propane trades resulted in a loss of $10 million to the company.

"Our view of the legality of these trades changed as our knowledge of the facts surrounding them became more complete," Malone said. "This settlement acknowledges our failure to adequately oversee our trading operation. The agreement provides compensation for victims and establishes a foundation for working with the government to ensure our participation in the nation's energy markets is always appropriate. We are determined to restore the trust of regulators in our trading operations."

After investigating the propane trades, BP America developed an enhanced compliance program specifically fit for the trading organization; increased compliance and legal resources; enhanced training for traders; upgraded transaction monitoring capability and improved metrics to measure compliance performance.
BP America announces resolution of Texas City, Alaska, propane trading, law enforcement investigations| press centre| bp.com

Here is what the CFTC had to say, partial quote:

Quote:
The TET propane market refers to propane that is deliverable at the TEPPCO storage facility in Mont Belvieu, Texas or anywhere within the TEPPCO pipeline system. The TEPPCO pipeline runs from Mont Belvieu, Texas up through Ohio, into New York, Pennsylvania and Illinois. The TEPPCO pipeline is the only pipeline that transports propane from Mont Belvieu to the Northeast and Midwest regions of the United States.

“Although this case was difficult, our professional staff used strategic techniques during thousands of hours of investigation to uncover BP’s misconduct. They effectively rooted out evidence of the defendant’s intentions. This settlement shows that BP has decided to take positive steps to rectify the situation and provide relief to those who were impacted by BP’s misdeeds,” said Gregory Mocek, CFTC’s Director of Enforcement.

The Order finds that in February 2004, BP employees sought to, and did, corner the TET propane market for the purpose of dictating prices to other market participants in order to obtain a significant trading profit. The Order finds that by engaging in this conduct, BP employees violated the Commodity Exchange Act’s prohibitions against manipulating the price of a commodity and cornering a commodity market. The Order finds that BP employees attempted to manipulate the price of TET propane in April 2003 by engaging in similar conduct.

The CFTC would like to thank the Department of Justice and U.S. Postal Inspection Service for their cooperative enforcement assistance in this matter.

The following CFTC Enforcement Division staff are responsible for the case: Joseph Konizeski, Deputy Director Joan Manley, Judy Lee, Charlotte Ohlmiller, and Associate Director Paul Hayeck.
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The key phrase form the CFTC is "...rooted out evidence of the defendant’s intentions." So, regulators spend thousands of hours to discover the intent of a trader is to make a boatload of money - and for that BP get fined even-though BP said they lost $10 mil on the trades???? Here is the issue, if any regulator spends thousands of hours looking for a problem, they will find one. For example, if I ever get investigated by the CFTC I will state (foolishly) that my intent is to make a boatload of money and if other traders let me corner the market, I will do it. Then after they complete their investigation, I will settle, agree to pay a fine, and set-up controls, etc., so it does not happen again. Is this "contemporary capitalism"? Not really capitalism at all but some weird hybrid system where big government does things for show to justify their existence, and the media goes bizzaro when they find people who actually do things to try and make money, but there always is another scheme being crafted by "aggressive traders", continuing the cycle? How would a true free market respond? I think more directly, faster and with more integrity.
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