Parnon Energy Inc., an oil logistics company, and Arcadia Petroleum Ltd., a London-based oil trader, failed to get a U.S. regulator’s lawsuit thrown out that claims they manipulated oil prices in 2007 and 2008.
U.S. District Judge William H. Pauley III in Manhattan today turned down the companies’ bid to dismiss a complaint filed in May 2011 by the U.S. Commodity Futures Trading Commission. The agency contends the companies illegally made more than $50 million trading derivatives tied to West Texas Intermediate crude oil.
Pauley rejected the companies’ arguments that the commission hadn’t adequately alleged violations of the law.
In addition to the companies, the CFTC sued James Dyer and Nicholas Wildgoose, who directed derivatives trading for both enterprises, according to the CFTC. They amassed a stockpile of crude oil in order to dominate supplies, then bought long and short positions in oil futures to make gains on the “artificial” rise in prices, the agency claimed.
Timothy Carey, a lawyer representing the defendants, didn’t immediately return a voice-mail message seeking comment on the ruling.
Parnon Energy, based in Rancho Santa Fe, California, and London-based Arcadia Petroleum, are subsidiaries of Farahead Holdings Inc., a closely held company based in Cyprus.
The case is U.S. Commodity Futures Trading Commission v. Parnon Energy Inc., 11-3543, U.S. District Court, Southern District of New York (Manhattan.)