Reuters: Regulatory News: UPDATE 2-EU oil pricing probe spurs lawsuit against BP, others

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UPDATE 2-EU oil pricing probe spurs lawsuit against BP, others May 23rd 2013, 22:56 Thu May 23, 2013 6:56pm EDT * BP, Shell, Statoil in EU oil price probe * First lawsuit seeks class-action status By Bernard Vaughan and Tom Polansek NEW YORK/CHICAGO May 23 (Reuters) - A Chicago-based commodities trading firm has filed suit against three of the world's largest oil companies, accusing them of colluding to fix oil prices after European authorities opened an investigation last week. Prime International Trading Ltd, which trades crude oil and other commodities, filed the proposed class-action lawsuit against BP Plc, Royal Dutch Shell Plc and Statoil on Wednesday, accusing the firms of misreporting trades in North Sea Brent, the oil benchmark which sets the price of about 70 percent of the world's crude. The lawsuit is seeking civil damages on the heels of a European Commission probe into the reporting of false prices to price-setting agency Platts, a unit of McGraw-Hill. Platts' information is used to price oil contracts, including Brent. None of the oil companies responded to phone calls and emails seeking comment on the lawsuit. No charges have yet been brought by European authorities, and the oil companies have said they are cooperating with the investigation. Statoil said last week the suspected violations may have been ongoing since 2002. "If it is found there was wrongdoing by the oil companies, the class-action suit would almost certainly significantly drive up the cost of any settlement," said Craig Pirrong, a University of Houston professor of finance and a commodities expert. Authorities last week raided the London bureau of Platts and the offices of the three oil majors named in the lawsuit. NATURAL GAS CASE The lawsuit accused the oil companies of reporting "inaccurate, misleading and false information" about Brent crude to Platts, and said it plans to include up to 50 other defendants who have not been named, but may also have participated in the alleged oil price manipulation. Phone calls and emails to the oil companies named in the suit were not immediately returned on Thursday. At Prime's office in Chicago, located on the 13th floor of an office building next door to the Chicago Board of Trade building, a CBOT floor clerk said that no one was available to discuss the case. Vincent Briganti, who works for Lowey Dannenberg Cohen & Hart which is representing the plaintiffs, declined to comment on the particulars of the case. The law firm was one of the companies that helped secure a $101 million settlement in a class-action suit related to the manipulation of U.S. natural gas price indexes a decade ago in the wake of the Enron scandal. Earlier this week, U.S. Senator Ron Wyden, who chairs the Senate's energy committee, asked the Justice Department to join the probe into potential oil market manipulation, by investigating whether it had boosted fuel prices for U.S. consumers. "Efforts to manipulate European oil indices, if proven, may have already impacted U.S. consumers and businesses, because of the interrelationships among world oil markets and hedging practices," Wyden wrote in a letter to U.S. Attorney General Eric Holder. Link this Share this Digg this Email Reprints

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