Reuters: Regulatory News: UPDATE 1-JPMorgan fined for wash trades in oil, gasoline

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UPDATE 1-JPMorgan fined for wash trades in oil, gasoline Jun 1st 2012, 15:34 Fri Jun 1, 2012 11:34am EDT June 1 (Reuters) - JPMorgan executed wash trades on 10 separate occasions in U.S. crude oil and gasoline futures in the first half of last year in an effort to manage position limits, the operator of the New York Mercantile Exchange (NYMEX) said in a disciplinary notice on Friday. Wash trades involve having the same dealer on opposite sides of the same trade, and are banned under exchange rules. CME Group, which operates NYMEX, ordered JPMorgan to pay a fine of $30,000. The fine, equivalent to just over one millionth of JPMorgan's total employee compensation last year of $29 billion, comes as the bank's trading practices are already under the spotlight after the now-infamous 'London Whale' racked up huge losses for the firm. Excessive speculation and energy price manipulation are also hot political topics during this U.S. election year. "On 10 separate occasions between January 1, 2011, and June 30, 2011, in an effort to manage position limits, traders employed by JPM executed block trades between separate legal entities with the same beneficial owner in WTI or Gasoline during the last three days prior to expiration of the particular contract," the notice said, referring to West Texas Intermediate (WTI), the main U.S. crude oil futures contract. "The (NYMEX Business Conduct Committee) Panel also found that in each of these 10 instances, the trader was the sole decision maker for both the buy and sell side of the trade." As part of the settlement, JPMorgan "neither admitted nor denied the rule violations," the notice said. In the first six months of 2011, U.S. crude oil prices rallied from around $91 a barrel to a post-2008 peak of $114.83 a barrel, before falling back to around $95 a barrel. On Friday, U.S. crude oil was trading around $83 a barrel. Link this Share this Digg this Email Reprints

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