The FSA has fined and banned a former oil futures broker for manipulating the price of brent oil after an "extremely heavy" drinking session.
Steven Noel Perkins has been banned for five years and fined £72,000 after manipulating the market in Brent oil and causing its price to soar to an "abnormal level" following a drinking binge lasting several days.
On Tuesday, 30 June 2009, Perkins - who traded orders on an execution only basis in Brent Crude Futures contracts on the ICE Futures Europe exchange (ICE) - traded without client authorisation. Perkins' employer, PVM Oil Futures Ltd, did no proprietary trading.
The regulator says he traded an "extremely high" volume in the ICE August 2009 Brent contract and in doing so accumulated a long outright position in Brent representing over 7 million barrels of oil.
As a result of his trading, the price of Brent increased significantly.
"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," says the FSA.
Perkins initially lied repeatedly to his employer to try and cover up his unauthorised trading.
The regulator says his trading "seems to have been a consequence of extremely heavy drinking resulting from alcoholism" - something Perkins acknowledges. He drank excessively over the weekend prior to 29 June and throughout Monday 29 June.
It adds his behaviour merited a penalty of £150,000 but because of his financial position the fine was reduced to £90,000. He also qualified for a 20% discount for agreeing to settle his case.
"Perkins' drunkenness does not excuse his market abuse," says FSA director of markets Alexander Justham. "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."
But head of the fraud group at law firms Eversheds Neill Blundell thinks the FSA could have taken a tougher line with Perkins.
"This case highlights the differing approaches of the regulator to cases of market manipulation and insider dealing," he says. "Whilst prosecution is the preferred choice of the FSA for insider dealing, the same is not true for other types of market abuse such as market manipulation.
"The FSA's approach can be contradictory to issues of market abuse - with one type of market abuse leading to imprisonment and another to a fine. This case was quite serious and yet only regulatory penalties were used."
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