In our last column, we discussed the ability of the Securities and Exchange Commission (SEC) to compel production of foreign documents in instances when such production may violate foreign law.1 More commonly these days, however, domestic and foreign regulators seem to be eyeing the same targets for the same offenses under the same theories. In this column, we describe parallel investigations by U.S. and EU regulators into the manipulation of various markets. These investigations, combined with regulatory developments in the United States, likely portend an increase in the number and scope of U.S. investigations into price-rigging in all markets. In particular, corporations involved in any market with prices set by benchmarks should be mindful of the ways such benchmarks can be prone to manipulation.
Increase in Investigations
On May 14, 2013, European Union antitrust regulators commenced a series of raids on a number of corporations involved in the oil industry. Firms raided included massive energy companies such as BP, Royal Dutch Shell and Statoil. Also raided was the Platts unit of McGraw Hill Financial Inc., a price reporting agency that publishes oil prices. The focus of the probe is suspected manipulation by energy companies of the $2.5 trillion physical oil market accomplished by providing false data to Platts.2 Traders voluntarily report data to Platts, and this data is used to determine prices. Investigators suspect that traders selectively reported trades to manipulate the pricing benchmark.
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