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You are here: Energy Sector & Market Manipulation

Energy Sector & Market Manipulation

FTC Issues Final Rule Prohibiting Fraudulent and Deceptive Conduct in the Petroleum Industry

Vinson & Elkins
August 17, 2009

Please see our Hot Topics for more on this subject.

FTC Announces Final Rule Regarding Market Manipulation in the Petroleum Market

Mayer Brown
August 14, 2009

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Federal Trade Commission Prohibits Petroleum Market Manipulation

Morgan Lewis
August 7, 2009

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Preventing Fraud in the Oil Patch: FTC Issues Final Market Manipulation Rule

Akin Gump
August  6, 2009

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FTC Issues Final Rule on Wholesale Petroleum "Market Manipulation"

Jones Day
Antitrust Alert
August 2009

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FTC Issues Revised Rules Regulating Market Manipulation in the Petroleum Industry

Vinson & Elkins
May 6, 2009

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FTC Makes New Proposal to Regulate Wholesale Petroleum "Market Manipulation"

Jones Day
April 2009
This Alert reviews with some concern the FTC’s revised proposed rules which are intended to prohibit "market manipulation" in wholesale petroleum markets. The proposed rules, largely based on the SEC’s famous rule prohibiting fraud or deceit in the sale of securities (ie Rule 10b-5 of the Exchange Act):

“would prohibit anyone, directly or indirectly, in connection with the purchase or sale of crude oil, gasoline, or petroleum distillates at wholesale, from (a) knowingly engaging in any act, practice, or course of business – including the making of any untrue statement of material fact – that operates or would operate as a fraud or deceit upon any person, or (b) intentionally failing to state a material fact that under the circumstances renders a statement made by such person misleading, provided that such omission distorts or tends to distort market conditions for any such product.”

Before addressing each of these key subsections, the Alert implicitly questions the need for in “overlay” of federal fraud regulation on the U.S. oil industry, noting that despite “numerous FTC investigations into oil markets” no evidence of significant anticompetitive or illegal conduct has been uncovered. Ratcheting up the level of concern as to the proposed rules (which although “improved” will still “lead to uncertainty”) is the FTC’s power to impose fines of up to $1 million per day for violations in addition to any relief available to the Commission under the FTC Act.

The comment period for the revised proposed rules is short (30 days) and the FTC has noted that “[o]nce public comments have been received and reviewed, the FTC will move quickly to conclude the rulemaking proceeding.” At least until the final rules are adopted, the Alert counsels that “oil industry participants may feel compelled to respond by internally controlling or curtailing external statements, which could have the negative effect of keeping valuable information out of the market.”

Please see our Hot Topics for more on this subject.