Tuesday, June 29, 2010

The drunk broker!

FSA fines and bans drunk oil broker
Tuesday, June 29, 2010

LONDON (Reuters) - The financial regulator has fined and banned a former PVM Oil Futures Ltd. broker for manipulating the price of oil last year by the unauthorised purchase of more than 7 million barrels while drunk.

The Financial Services Authority (FSA) said in a statement it had fined Steven Noel Perkins 72,000 pounds and banned him from working in the financial services industry for at least five years for buying huge volumes of Brent crude oil without client authorisation.

"As a direct result of Perkins' trading, the price of Brent increased significantly," the FSA said in a statement.

"Perkins' trading manipulated the market in Brent by giving a false and misleading impression as to the supply, demand and price of Brent and caused the price of Brent to increase to an abnormal and artificial level."

The FSA said that in the early hours of Tuesday June 30 2009, Perkins traded in "extremely high volume" on the ICE August Brent crude oil future contract, accumulating a position equivalent to over 7 million barrels of oil.

Perkins had been drinking extremely heavily over the weekend prior to June 29 and had continued drinking through Monday before executing the trades, the FSA said. Since the incident Perkins has joined a rehabilitation programme for alcoholics and has stopped drinking.

"The FSA views market manipulation extremely seriously. Perkins' trading caused disruption to the market and has been met with both a fine and prohibition," said Alexander Justham, director of markets at the FSA.

"This reinforces the fact that a severe sanction will apply in cases of market manipulation, even where no profit is made. Perkins' drunkenness does not excuse his market abuse. Perkins has been banned because he is not a fit and proper person to be involved in regulated activities and his behaviour posed a risk to the proper functioning of the market."

The FSA said it is possible that Perkins may be rehabilitated over time and may be permitted to work in financial services again in the future.

Perkins trading pushed the price of Brent crude oil up to $73.50 a barrel -- the highest level it had hit in 2009 at that time. Closing out the unauthorised trades landed PVM with a loss of almost $10 million (6.6 million pounds).

PVM is an oil brokerage that executes trades on behalf of its clients, but it's does not carry out proprietary trading for its own account.

"Mr Perkins' job was confined to acting as a broker to execute trades ordered by clients; he was not permitted to execute any trades without a client's prior authorisation," the FSA said.

The FSA made no criticism of PVM in the notice. A PVM spokesman at PVM said the company now believes the matter is "fully closed."

(Reporting by David Sheppard; editing by William Hardy)

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