Two oil traders and their trading firms, already facing regulatory charges of alleged manipulation in the market for crude oil futures, were sued Thursday by a derivatives trader who claims he was harmed by their activities.
The lawsuit comes two days after the Commodity Futures Trading Commission sued the two traders in its biggest ever oil market manipulation case. The CFTC case against traders James Dyer of Oklahoma's Parnon Energy and Nicholas Wildgoose of Europe-based Arcadia Energy marks an aggressive push by regulators seeking to police the commodities markets.
The derivatives trader, Stephen Ardizzone, filed his own case against the defendants, seeking class-action status on behalf of other investors he claims were also harmed by the alleged market manipulation.
The lawsuit says that Dyer, Wildgoose and their trading firms manipulated derivative financial contract prices for West Texas Intermediate crude oil traded on the New York Mercantile Exchange from late 2007 to mid-2008.
Defendants aggressively exploited their massive physical WTI position to cause artificial prices that unlawfully created profits from their trading positions, the lawsuit said.
The case was filed in U.S. District Court in Manhattan, the same court where the CFTC brought its case on Tuesday.
The defendants are familiar names in the U.S. oil market. Dyer and Wildgoose were both traders at BP Plc
BP was hit with a record $2.5 million fine by the New York Mercantile Exchange in 2003 for alleged U.S. oil market manipulation, which it paid without admitting any wrongdoing. Neither Dyer nor Wildgoose was accused of misconduct in that case.
In Tuesday's case, the CFTC alleged that Dyer and Wildgoose amassed and sold off of a substantial position in physical crude oil to manipulate futures prices.
Colin Hurley, the chief financial officer of Arcadia, which is affiliated with Parnon, said in a statement Wednesday it plans to fight those charges.
London-based Arcadia, a major global oil trader, and Parnon are both owned by Norwegian tycoon John Fredriksen, known as Big Wolf in the shipping industry.
Dyer lives in Brisbane, Australia, while Nicholas Wildgoose lives in Rancho Santa Fe, California, according to Thursday's lawsuit brought by Ardizzone, of Staten Island, New York.
Ardizzone makes claims for manipulation in violation of the Commodity Exchange Act and monopolization in violation of the Sherman Act.
The lawsuit does not specify an amount of damages sought, but Kellie Lerner, an attorney for Ardizzone, said that the estimated damages are in excess of the $50 million that the CFTC says the defendants illegally pocketed from their scheme.
Lerner also said that the potential group of traders harmed by the defendants' actions was likely to be in the thousands.
Ardizzone's case is not yet a class-action. That designation can only be made by a judge, who would decide whether a group of plaintiffs can pursue a case collectively.
The case is Stephen E. Ardizzone v. Parnon Inc et al, U.S. District Court for the Southern District of New York, No. 11-3600.
(Reporting by Andrew Longstreth; Editing by Jim Marshall and Alden Bentley)