| BP unit tried to manipulate propane prices-US CFTC|
Wed Jun 28, 2006 1:11pm ET
WASHINGTON, June 28 (Reuters) - The U.S. futures industry regulator said on Wednesday that a U.S. unit of London-based BP Plc. tried to manipulate propane prices in the United States by cornering the market in February 2004.
"With the knowledge, advice, and consent of senior management, BP employees developed and executed a speculative trading strategy in which BP cornered the February 2004 ... physical propane market," the Commodity Futures Trading Commission alleged in a 42-page complaint filed in a U.S. district court in Illinois.
BP denied that any market manipulation occurred and will contest the charges in court, company spokesman Ronnie Chappell said. BP has dismissed several employees for failing to comply with its guidelines, and cooperated fully with CFTC investigators, Chappell said.
"Market manipulation did not occur and we are prepared to make and to prove that case in courts," he said.
Former BP propane trader Dennis Abbott on Wednesday pleaded guilty to trying to manipulate propane prices, the U.S. Justice Department said.
Abbott, 34, faces five years in prison and a $250,000 fine, and has agreed to cooperate with investigators, it said.
Employees at BP Products North America Inc., a wholly owned subsidiary of BP Plc, sought a profit of at least $20 million through its actions, the CFTC said. BP is the largest supplier of propane in North America.
"Cornering a commodity market is more than a threat to market integrity," said Gregory Mocek, the CFTC's enforcement director. "It is an illegal activity that could have repercussions for commercial market participants as well as retail consumers around this country."
According to the CFTC's complaint, BP employees bought "enormous quantities" of propane, until it owned more than 88 percent of all supplies to be delivered through the TEPPCO products pipeline from Mont Belvieu, Texas, to markets in the Northeast and Midwest United States.
BP had a "dominant and controlling position" in propane that allowed it to drive prices up above 90 cents per gallon on Feb. 27, 2004, the CFTC said.
Most of those supplies were going to retain customers in rural areas to heat their homes, the CFTC said.
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