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US Justice Dept probes suspected manipulation of Platts benchmarks

WASHINGTON: The US Department of Justice is investigating suspected manipulation of energy pricing benchmarks published by S&P Global Platts, expanding the agency’s crackdown on misconduct in the global commodities market, according to four people familiar with the matter.

London-based Platts is a data and news provider which focuses on energy, metal and agricultural commodities. The company collects data from traders on their deal prices to determine a daily market price for a number of physical commodities.

U.S. prosecutors are probing suspected manipulative behavior by individual traders when submitting those deal prices to Platts’ price assessments for oil and other energy benchmarks, the four people said, without specifying which ones.

The people declined to be named as the probes are not public.

Over the past year, U.S. authorities have brought two cases of alleged manipulation of Platts’ oil benchmarks by traders at two different companies, but prosecutors are now probing similar behavior across the market, the sources said.

The previously unreported, industrywide probe opens up a new front in the Justice Department’s crackdown on fraud, bribery and manipulation in the commodities market raising the stakes for traders and companies globally which daily use Platts’ benchmarks to price billions of dollars’ worth of contracts.

The sources said prosecutors are focused on traders’ behavior and gave no indication of suspected wrongdoing by Platts.

In response to a request for comment by Reuters, Platts said it conducts reviews to ensure the integrity of its price assessments. Platts publishes data and correspondence used to determine a price assessment and provides this data to regulators when requested, said Dave Ernsberger, global head of pricing and market insight for S&P Global Platts.

“We’ve spoken with U.S. and global authorities across a whole range of markets for many years,” Ernsberger said.

He declined to comment on any potential probes.

A spokesperson for the Justice Department declined to comment.

COMMODITIES SCRUTINY
Over the past decade, authorities globally have levied multibillion-dollar fines and pursued criminal charges against banks and traders for banding together to rig global benchmarks, most notoriously the London Interbank Offered Rate.

While U.S. criminal authorities pursued cases against energy traders in the 2000s related to benchmark-rigging, in the years that followed commodities market manipulation was largely the domain of civil agencies including the Commodity Futures Trading Commission (CFTC) and the Federal Energy Regulatory Commission.

Since 2019, however, the Justice Department, working with the CFTC, has ramped up scrutiny of the commodities market via a specialist unit within its Washington-based fraud division. That unit has developed sophisticated data analytics tools to more quickly detect misconduct, Reuters reported last year.

While the unit initially focused on commodities futures spoofing, a type of futures market manipulation, it now has the tools and expertise to dig into other areas of the market, including industry benchmarks operated by price reporting agencies, said one of the sources.

The agency has also investigated some of the world’s largest energy trading companies for bribery, including Dutch trading giant Vitol.

That and another recent case identified misconduct in relation to Platts’ benchmarks.

When settling bribery charges with the Justice Department in December last year, Vitol also settled related charges brought by the CFTC.

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