What EXACTLY Optiver -the hedge fund sued by CFTC- did?

Discussion in 'Energy Futures' started by crgarcia, Jul 25, 2008.

  1. "today the CFTC filed civil charges against Optiver, a Dutch hedge fund, plus two subsidiaries and three employees, alleging manipulation of crude oil, heating oil and gasoline futures prices on the NYMEX. According to the charges, the defendants attempted to manipulate short-term prices on 19 different occasions in March 2007, were successful at least five times, and netted an illicit profit of $1 million"
    http://money.cnn.com/2008/07/24/news/economy/okeefe_cftc.fortune/index.htm?postversion=2008072418

    They manipulated the market, yet they only made $1 million?
     
  2. They would basically submit a market on close order to buy 10,000 CL's guaranteed on the last tick, then short the piss out of the market in the last 60 seconds to artificially mark the last tick as low as possible locking in a profit.

    It's basically a routine CFTC enforcement action against a piker ($1mm) that is being blown into a big story since "manipulator" and "speculator" are the media buzzwords du jour.

    Incidentally, this probably happens 100x a week in stocks and is rarely enforced.
     
  3. Isn't this kind of thing, buying and selling, called "trading"?
     
  4. I was wondering what the CFTC would have done if the investigation found that Optiver lost $1m in their trading scheme? If you make money trading its manipulation? If you lose, it's not?
     
  5. It all makes sense now.

    It was Optiver Capital, LLC all along, rigging the game and secretly pulling the levers.

    And they made a massive 1 million over 11 trading days.

    I'm so comforted that the CFTC got to the bottom of this, and we all know the answer to the question that had been vexing us for so long.


    What a frickin' joke. This is just pathetic. Does the SEC or CFTC actually think anyone is buying the total bullshit they're peddling?

    Are they out of their minds?

    Simply incredible.
     
  6. Yes, but there are rules.

    The subtle difference here being they held a 3rd party to execute their market on close order on an artificially marked close.

    I agree it's a bullshit case being trumped up due to the speculator witch hunt, but CFTC is well within their bounds to enforce it.