Decoding alleged market manipulation in energy markets
This project involved investigations by multiple government agencies, including the Commodities Futures Trading Commission (CFTC), the U.S. Department of Justice (DOJ) and international regulators into alleged price manipulation of fuel oil benchmarks. My team served as the trading analytics expert, analyzing whether our client’s market positions and trading activities were indicative of improper trading and price manipulation, and tasked with calculating and attributing damages to the alleged conduct for settlement negotiations. The case was made even more complex by the fact that the client was also facing allegations of violating the Foreign Corrupt Practices Act (FCPA).
I played a role in most every aspect of the engagement, from the initial data cleaning and preparation all the way up to presenting our findings to the CFTC and DOJ. I developed the main repository of code used to analyze and visualize client positions in relation to market actions/price moves, a vital component of understanding where potential manipulation had or had not occurred.
The breadth of the alleged timeline of improper activity—and the corresponding amount of analysis needed to support or refute such conclusions—meant that we had to simultaneously cast a wide net and also be able to drill down on specifics. We also needed to clean a massive amount of data up front, which required us to unify two distinct and complex data systems into one cohesive set.
My experience working with large-scale trading data, and the knowledge of how best to analyze and contextualize such data, was critical to understanding whether we were seeing any indicators of potentially manipulative conduct. I also relied on my past experiences presenting to regulators to understand what arguments would be the most compelling, which shaped the types of analyses we conducted and informed the client’s main messaging in negotiations with the regulators.
The firm has always been supportive of continuing education and skill-building, which has allowed me to grow my expertise in these complex trading investigations. I also think the investment AlixPartners makes to have the best-in-kind technology available to our people is important, because without that, we would not have been able to manage the analytical demands of this project and almost all the other projects our group takes on.
Ultimately, we were able to help the client successfully negotiate with the government and settle without admitting to any liability regarding market manipulation. It was rewarding to help our client get across the finish line in a difficult and complex matter!