Landmark matter, Glencore 2022
On 24 May 2022 the CFTC found that three Glencore companies manipulated or attempted to manipulate four Platts fuel oil benchmarks, misused confidential information and paid bribes. They paid $865.6 million in penalty and $320.7 million in disgorgement, up to $852.8 million of it offset by criminal payments. No individual was named.
On 24 May 2022 the Commodity Futures Trading Commission announced the largest civil penalty and the largest disgorgement in its history, against three Glencore companies. It is the third-largest penalty among the library’s records. The number is real, but it hides three things: a settlement that rests on three different kinds of finding, a sum that three respondents owe jointly, and an offset that lets payments to the Justice Department satisfy most of it. This post goes through what the order says, taken from the CFTC order and the CFTC release, and what it leaves open. The library record is CFTC v. Glencore International A.G., Glencore Ltd. and Chemoil Corporation.
Who was a respondent, and how it ended
The respondents are three companies: Glencore International A.G. of Baar, Switzerland, Glencore Ltd. of New York, and Chemoil Corporation of New York. The order treats them together as “Glencore”. It says none of them or their affiliates has ever been registered with the Commission. No individual is a respondent. The traders appear only as “Trader-1” and similar labels, and the order describes senior traders, desk heads and supervisors, up to the global head of the oil group, as involved without naming anyone.
This was a settlement, not a trial. The companies made an offer of settlement, and the Commission accepted it and entered the order the same day it was announced. The companies neither admitted nor denied the findings, with two exceptions written into the order: they admit the findings to the extent they do so in a related Justice Department resolution or with another government agency, and to the extent they were admitted in an earlier CFTC consent order (In re Collado, March 2021). They also agreed that the findings may be treated as true in other proceedings the Commission brings, and not to deny them publicly. So the findings below are findings of the Commission in a consent order. They have not been tested at a contested hearing.
What the order finds
The order is organised as three separate violations. The record’s one-line summary (“manipulating four benchmarks, and corruption-related fraud”) compresses them, so it helps to pull them apart.
First, the benchmark conduct. Platts, a London-based price-reporting agency, assessed four US fuel oil benchmarks from its Houston office: Los Angeles bunker fuel, New York Harbor low-sulphur fuel oil, New York Harbor high-sulphur fuel oil and US Gulf Coast high-sulphur fuel oil. Platts set each one mainly from the bids, offers and trades that approved participants reported during a short daily window at the close of trading, starting from a reference level called the peg. Physical cargo contracts and futures and swaps traded on exchanges such as NYMEX and ICE Futures U.S. were then priced off these assessments.
The order finds that on days when Glencore had a large exposure to a benchmark, its traders placed rising bids or falling offers in the window, with the intent of moving the assessment in the direction that helped the position. It says this happened on hundreds of days across the four benchmarks and three US markets. The order’s own examples are specific. In May 2013 Glencore sold about 40,000 tonnes of fuel oil to a state-owned Mexican company, priced off the Los Angeles benchmark on three days. A trader directed bids that were raised 27, 23 and 9 times on those days, and Platts assessed the benchmark on average $19.33 above the peg. In October 2015 the mirror image: offers lowered 39, 38 and 22 times on three pricing days of a purchase, and an average assessment $33.17 below the peg. In the Gulf Coast and New York Harbor examples the order counts hundreds of bids or offers in a month, such as about 728 raised bids in November 2012, against a stated exposure of more than 8,800,000 barrels.
The distinction the order draws matters. It finds that Glencore manipulated or attempted to manipulate the Los Angeles benchmark, and that it attempted to manipulate the other three. In its legal section it says Glencore personnel could, and at times did, create artificial prices in Los Angeles. The headline phrase “manipulation of four benchmarks” is therefore broader than the finding for three of them. The Los Angeles conduct is also tied to a two-sided arrangement the order calls an informal joint venture with the Mexican state-owned company, from December 2012 to January 2016, in which the two shared profit from blending and reselling fuel oil cargoes priced off the same benchmark.
Second, misused confidential information. The order finds that Glencore obtained non-public information from employees and agents of state-owned entities, including in Mexico, who owed a duty of confidence to their employer, and traded and negotiated with it. This is the order’s route to a fraud finding rather than an insider-trading one in the equity sense.
Third, bribery. The order finds corrupt payments to employees and agents of state-owned oil companies in Brazil, Cameroon, Nigeria and Venezuela, with similar conduct in Equatorial Guinea and Ivory Coast noted in a footnote, in exchange for preferential treatment and access to trades. In Nigeria and Cameroon it describes payments over several years, from at least 2007 to at least 2015, amounting to millions of dollars, linked to more than 100 cargo trades. It records cash payments, invoices disguised as “commission” or “marketing services”, and coded language for the payments.
The statutes are Sections 6(c)(1), 6(c)(1)(A), 6(c)(3) and 9(a)(2) of the Commodity Exchange Act and Regulations 180.1 and 180.2. In plain terms: a manipulative or fraudulent device, a false or misleading report (the order treats the bids, offers and “market view” messages sent to Platts as reports), and price manipulation. Charges run from 15 August 2011, the start of what the order calls the charging period, to at least 2018, although the descriptive findings reach back to 2007. The record’s “2007 to 2018” is the descriptive period, not the period of the violations as charged.
The money, and the caveats
The order imposes a civil monetary penalty of $865,630,784 and requires disgorgement of $320,715,066, for a monetary sanction of $1,186,345,850. Three caveats apply when the figure is used.
It is one sum, owed jointly. The three companies are liable jointly and severally. The library’s record stores a single penalty and a single disgorgement figure for the matter, so the $1.186 billion must not be multiplied by three or divided among the respondents. The order does not say how it is apportioned.
Up to $852,797,810 of it can be satisfied by criminal payments. The order provides that the monetary sanction is offset, up to that figure, by any payment under the Justice Department resolutions of the same day. The release says the Fraud Section announced two separate criminal actions that day, and that the UK Serious Fraud Office announced separate charges. The offset is a ceiling, not a payment: the order does not say what was paid, only that proof of any payment under the criminal resolutions must be provided within ten business days. The arithmetic is plain. If the whole offset were used, $333,548,040 would remain on the CFTC order alone. This library holds no criminal record linked to this matter, so aggregate figures that add this record’s penalty to other penalties count the gross number, and any ranking by penalty includes money that may have been paid once, to another authority.
The basis of the numbers is not explained. The order says the conduct produced “hundreds of millions of dollars” in improper gains and that the benchmark conduct produced “millions” in extra profit, but I found no passage computing the penalty or the disgorgement from those figures. The order does not say whether the disgorgement is a measured profit from the benchmark conduct alone or a sum covering all three kinds of violation, so do not read it as the former. The record’s own text notes the library separates penalty from disgorgement so totals are not double-counted; that fixes one double count, not this one.
Beyond money the order requires a cease-and-desist, a compliance monitor under the terms of the criminal resolutions, a ban on public statements that deny its findings, and cooperation with the Commission. It imposes no trading ban on a registered person, because none of the respondents was registered.
Related records
Two other records mention Glencore or the same price-reporting agency, and neither adds to this matter’s money. Vitol Inc., December 2020, is an earlier settled order the Glencore order cites as precedent. The CFTC release for the Glencore order calls Glencore the agency’s second foreign-corruption action, and the record for Vitol notes the release gave only a combined figure over $95 million. It involves attempted manipulation of two Platts benchmarks plus corruption, so it is the closest comparison in the library, with a different respondent and a different date. Glencore Agriculture B.V. and Glencore Ltd., April 2018, is not part of the 2022 matter. Its release concerns cotton futures position limits, exchange-of-futures-for-physical trades done between related accounts and inaccurate position filings, with a $2 million penalty; the record’s “wash trading” tag appears to rest on the EFP finding and is a loose fit, so read the release before using it. Do not add its $2 million to the $1.186 billion as if it were one case.
What the matter established, and what it did not
It established, as consent findings of a regulator, three things. A commodity trading group used a daily price-assessment window to try to move published benchmarks that its own book depended on, and in Los Angeles the order says it could and at times did succeed. It used non-public information taken from a counterparty’s people. It paid bribes for access to cargoes. The CFTC placed all three under its anti-fraud and anti-manipulation provisions, which is the point of the case for the price manipulation technique page: the same facts are charged as manipulation, as fraud and as false reporting at once.
It did not establish several things people infer from the headline. It did not find individual liability: no trader or executive is a respondent, and the order merely notes that the Commission could act against employees separately. It did not quantify harm to counterparties or to consumers: the order says the conduct harmed counterparties and other participants, but gives no total loss. Statements in the release about prices at the pump are a Chairman’s argument, not a finding, and the library draws no causal claim from them. It did not accuse Platts of anything. It did not decide the legal limits of its theory, because nobody contested it: the order relies on earlier consent orders for the proposition that bids and offers placed to benefit a position can be manipulation, so it adds to a line of settlements rather than a court judgment. And it does not say how many of the hundreds of days produced a price effect.
Where it sits in the wider record: six of the library’s ten largest penalty records are CFTC settlements, and the library flags a parallel criminal matter on many large ones, as here. The post on civil cases with a criminal parallel and the post on what the records show about sanctions put this one in that setting, and how long enforcement cases take is a reminder that a settled order dated 2022 describes conduct that ended in 2018 and began, on the order’s account, in 2007.
Limits of this reading
I read the order and the release in full and checked every figure above against the order. I did not read the Justice Department documents, the Collado consent order, the UK Serious Fraud Office charges, or the three four commissioners’ statements listed with the release, so what those say is outside this post. The library’s records were checked by AI agents against the primary documents with no lawyer review, as the audit post explains. If something here is wrong, the corrections page says how to report it.
Techniques referenced
Cases referenced
| Action | Agency | Filed | Technique | Penalty | Status |
|---|---|---|---|---|---|
| CFTC v. Glencore International A.G., Glencore Ltd. and Chemoil Corporation (price manipulation, 2022) | CFTC | 2022-05-24 | Price Manipulation | $866m | settled |
| CFTC v. Vitol Inc. (price manipulation, 2020) | CFTC | 2020-12-03 | Price Manipulation | — | settled |
| CFTC v. Glencore Agriculture B.V. and Glencore Ltd. (wash trading, 2018) | CFTC | 2018-04-30 | Wash Trading | $2m | judgment |