On May 24, the U.S. Commodity Futures Trading Commission (CFTC) announced settled charges against Glencore International A.G. of Switzerland, Glencore Ltd. of New York, and Chemoil Corporation of New York (collectively, Glencore), an energy and commodities trading firm, for manipulation and foreign corruption in the U.S. and global oil markets. To settle the charges Glencore is to pay a total of $1.186 billion, the largest settlement in CFTC history.
Through the CFTC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide the agency with original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds collected by the government.
According to the CFTC, “from as early as 2007 through at least 2018, Glencore sought to increase profits from its physical and derivatives oil products trading by manipulating or attempting to manipulate U.S. price-assessment benchmarks relating to physical fuel oil products, and related futures and swaps, in order to benefit Glencore’s trading positions.” The CFTC further alleges that “Glencore personnel engaged in this conduct with the specific intent to manipulate the price of fuel oil products in interstate commerce and to create artificial prices, and could and at times did create artificial prices.”
Glencore also paid bribes and kickbacks to employees and agents of certain state-owned entities (SOEs) in Brazil, Cameroon, Nigeria, and Venezuela, according to the CFTC. “Glencore or its affiliates made the corrupt payments in exchange for improper preferential treatment and access to trades with the SOEs,” the CFTC claims. “Glencore’s conduct was intended to and did secure unlawful competitive advantages in trading physical oil products and related derivatives to the detriment of its counterparties and market participants.”
The $1.186 billion in total sanctions against Glencore includes an $865,630,784 civil monetary penalty and $320,715,066 in disgorgement. Both of these figures are the highest in CFTC history.
“When individuals and entities seek to disrupt the reliability of benchmarks, they interfere with the proper functioning of the markets that directly impact consumers,” said Chairman Rostin Behnam. “Without question, manipulating oil markets can drive up the cost Americans pay at the pump or to heat their homes. And today my message to the markets is clear: the CFTC will continue to pursue even the slightest hint of manipulative, corrupt, or fraudulent behavior.”
The CFTC does not disclose whether or not a whistleblower was involved in a case due to the Whistleblower Program’s strong confidentiality protections. As with all enforcement actions resulting in at least $1 million in sanctions, the CFTC will post a Notice of Covered Action (NCA) for the case. This NCA will signal that individuals have 90 days to file a whistleblower award application for the case.
The largest whistleblower award ever granted by the CFTC was granted on October 21, 2021 for nearly $200 million. “This milestone illustrates that the CFTC’s Whistleblower Program has had a tremendous impact on increasing our enforcement efforts in its short history,” said CFTC Acting Director of Enforcement Vincent McGonagle. “In many of our actions, whistleblowers’ assistance has been critical in revealing wrongdoing, and their tips ultimately conserve the CFTC’s time and resources.”
Overall, since issuing its first award in 2014, the CFTC has doled out approximately $330 million in whistleblower awards in connection to “enforcement actions that have resulted in monetary sanctions totaling more than $3 billion.”
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CFTC Orders Glencore to Pay $1.186 Billion for Manipulation and Corruption