Warrenville, IL – October 25, 2007 – BP Products North America Inc. has agreed to a record $303 million settlement with the U.S. Commodity Futures Trading Commission (CFTC) and the Department of Justice (DOJ) to resolve charges of manipulating the price of TET propane, a key fuel source for the Northeast and Midwest, in 2003 and 2004.
The CFTC filed a civil action against BP on June 28, 2006, alleging the company attempted to corner the market for TET propane in February 2004 and manipulated prices in both February 2004 and April 2003. The DOJ simultaneously entered into a deferred prosecution agreement with BP America Inc. based on the same conduct.
According to the CFTC, BP employees strategically sought to corner the TET propane market, which relies on the TEPPCO pipeline system running from Mont Belvieu, Texas, through the Midwest and Northeast, to dictate prices to other participants. The TEPPCO pipeline is the sole conduit for transporting propane from Mont Belvieu to those regions.
Under the terms of the settlement, BP will pay a $125 million civil monetary penalty to the CFTC and a $100 million criminal penalty to the DOJ. Additionally, BP will contribute $25 million to a consumer fraud fund and approximately $53 million to a restitution fund for those harmed by the manipulation. BP is also required to establish a compliance and ethics program and appoint a monitor to oversee its commodity trading activities.
“This case demonstrates that the CFTC will aggressively combat manipulation in the nation’s energy markets,” stated CFTC Acting Chairman Walt Lukken. “Disrupting the energy markets hurts American consumers, and traders who engage in such misconduct face serious consequences.”
Gregory Mocek, CFTC’s Director of Enforcement, highlighted the extensive investigation, stating, “Our professional staff used strategic techniques during thousands of hours of investigation to uncover BP’s misconduct…This settlement shows that BP has decided to take positive steps to rectify the situation and provide relief to those who were impacted by BP’s misdeeds.”
Source: CFTC.gov
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