FTC Targets Oil Fraud

 

The Obama administration has sent a strong signal that it plans to crack down on oil fraud in the markets.

 

On Thursday, The U.S. Federal Trade Commission (FTC) said would impose $1 million per day fines on energy traders engaged in price manipulation, Reuters reported.

 

The FTC said it will target violations, such as false public announcements of planned pricing or petroleum output decisions, false statistical or data reporting, and so-called “wash sales” intended to disguise the liquidity in a market or pricing of a product.

 

Analysts weighed in yesterday on how such a move might affect business.

 

“Overall, this seems a relatively minor adjustment that I would not expect to have any impact on trading activity or price levels,” said Tim Evans, Energy Analyst Citi Futures Perspective, New York. 

 

“What makes one a violator is not clear,” Dan Flynn, analyst at PFGBest Research, Chicago told Reuters. ” They’re way too vague. They’re taking speculators out of the market. I see more U.S. jobs lost because, if they can’t do it here, what is to prevent them from doing it somewhere else. We’re getting into over regulation.”

 

Other cash traders noted it remains to be seen what resources the already understaffed agency can even commit to the effort, and that they were uncertain how the regulations would help.

 

 

 

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