Chris Prentice, Jody Godoy

WASHINGTON (Reuters) – The U.S. Department of Justice is investigating suspected manipulation of energy pricing benchmarks published by S&P Global (NYSE:) Platts, expanding the agency’s crackdown on misconduct in the global commodities market, according to four people familiar with the matter.

Platts, a London-based data provider and news provider that focuses on agricultural commodities and metals as well as energy and metals, is headquartered in London. To determine the daily market price of a variety of physical commodities, the company gathers information from traders about their trade prices.

The four individuals said that U.S. prosecutors were investigating the manipulation of individual traders who submitted those prices to Platts for their price assessments for oil. They did not specify which benchmarks.

As the probes are confidential, it was not possible to name them.

Two cases have been brought by the U.S. government involving alleged manipulations of Platts’ oil benchmarks. These were filed last year by two separate traders. But, prosecutors are currently investigating similar conduct across the market.

The previously unreported, industrywide probe opens up a new front in the Justice Department’s crackdown on fraud, bribery and manipulation in the commodities market https://www.reuters.com/subjects/banks/article/us-usa-doj-trading-insight/traders-beware-u-s-taps-new-tools-to-find-fraud-in-volatile-commodities-market-idUSKBN22X14E, raising the stakes for traders and companies globally which daily use Platts’ benchmarks to price billions of dollars’ worth of contracts.

According to sources, prosecutors are focusing on trading behavior but did not mention any suspected wrongdoing of Platts.

Platts responded to a request by Reuters for comment. It stated that it reviews price assessments to verify their integrity. Platts publishes data and correspondence used to determine a price assessment and provides this data to regulators when requested, said Dave Ernsberger, global head of pricing and market insight for S&P Global Platts.

Ernsberger explained that “we’ve talked with U.S. officials across a variety of markets over many years.”

He did not comment on possible probes.

The spokesperson from the Justice Department refused to comment.

SCRUTINY IN COMMODITIES

Globally, over the last decade authorities have levied fines in excess of a billion dollars and brought criminal cases against traders and banks for conspiring to rig benchmarks global, including the London Interbank Offered rate.

Although U.S. law enforcement pursued criminal cases in 2000 against U.S. energy traders for benchmark-rigging in some instances, the case was largely dismissed by civil authorities such as the Commodity Futures Trading Commission or the Federal Energy Regulatory Commission in years to come.

The Justice Department has intensified its scrutiny of the commodities markets through a unit in the Washington-based Fraud Division. That unit has developed sophisticated data analytics tools to more quickly detect misconduct, Reuters reported https://cn.reuters.com/article/us-usa-doj-trading-insight-idUSKBN22X14E last year.

Although the original focus was on futures manipulators in commodities, the unit now has the expertise and tools to investigate other markets, like industry benchmarks maintained by price reporting agents.

This agency also conducted investigations into some of the biggest energy trading businesses in the world for possible bribery. Vitol is a Dutch trading company.

In this case, and in another, misconduct was identified with respect to Platts’ benchmarks.

Vitol settled related charges by the CFTC in addition to the bribery charge that he had pleaded guilty to with the Justice Department. Vitol also paid a civil penalty for the CFTC in settlement of charges related to attempted manipulation of 2 Platts oil benchmarks.

Vitol claimed at the time that it was dedicated to the upholding of the law, and had cooperated extensively throughout the investigation. The allegations of the CFTC were not denied or admitted by Vitol.

An ex-oil trader at Glencore (OTC.) Plc pleaded guilty March to Justice Department allegations that he conspired for manipulating the Platts standard for a particular oil.

The Justice Department claims that Emilio Jose Heredia Collado ordered colleagues to sell or buy orders in a Platts trading settlement window, which was key for determining the price of fuel oil. Court documents prove this.

The Justice Department claimed that Heredia was able to influence benchmark prices for his employer and himself.

Authorities have stated that he has been cooperating with an ongoing U.S. inquiry since August.

He did not reply to comments from his attorney. Glencore refused to comment.

“In these two cases, the regulators didn’t accuse Platts or offer any evidence that attempted manipulations were successful or that market values weren’t being reflected in our assessments,” Platts stated in a statement.

Justice Department is also looking into other commodities traders. Energy trader Gunvor Group has said it is being probed by U.S. authorities https://www.reuters.com/business/energy/energy-trader-gunvor-group-says-us-cftc-investigating-ecuador-dealings-2021-09-28 for corruption in Ecuador after a former employee pleaded https://www.reuters.com/business/energy/man-pleads-guilty-ny-money-laundering-charge-linked-petroecuador-2021-04-06 guilty to bribery charges in April.