Federal regulators allege propane price manipulation by BP Jaime Jansen at 9:11 AM ET
[JURIST] The US Commodity Futures Trading Commission (CFTC) [official website] filed a civil lawsuit [PDF complaint; press release] in federal court Wednesday alleging that at least six current and former employees of BP North America [corporate website] manipulated propane prices in 2004 by using BP's dominant market position to increase heating costs in the middle of winter. The CFTC is seeking an injunction against BP, other equitable relief and monetary penalties under the Commodities Exchange Act [text]. BP denied any wrongdoing [press release] and indicated that it would fight the charges in court. The company also said it would cooperate with a parallel criminal investigation by the US Justice Department (DOJ) [official website]. Dennis N. Abbott, a former BP trader, faces up to five years in prison and a fine of $250,000 after he pleaded guilty [DOJ press release] on Wednesday to a conspiracy charge in the criminal investigation.
The lawsuit, filed in US District Court for the Northern District of Illinois [official website], alleges that BP caused prices to spike by buying large quantities of propane in January 2004 and then hoarding that stock to push prices up. The price of propane rose from 63 cents per gallon to 94 cents per gallon that February. Jad Mouawad of the New York Times has more.
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