Antitrust Law Daily Wrap Up, ANTITRUST—S.D. N.Y.: Optiver’s $16.75M settlement over energy futures price manipulation gets final approval, (Jun 24, 2015)

By Linda O’Brien, J.D., LL.M.

The federal district court in New York City has given final approval to the $16.75 million settlement of a class action suit by investors against a global trading fund for engaging in an unlawful trading scheme to manipulate the settlement prices for light sweet crude oil, heating oil, and gasoline futures contracts traded on the New York Mercantile Exchange (NYMEX) (In re Optiver Commodities Litigation, June 22, 2015, Preska, L.).

Optiver engages in the trading of stocks, futures, and options on all of the world’s major financial markets. A group of investors filed suit against Optiver, alleging that the trading fund manipulated oil and gasoline futures contracts over a 24-day period in 2007. The investors asserted that, in violation of the Sherman Act and Commodity Exchange Act, the fund’s traders amassed dominant NYMEX trading at settlement (TAS) positions and offset such positions through NYMEX futures contracts transactions in the opposite direction between March 2, 2007 and March 26, 2007. The defendants’ transactions caused the volume weighted average prices on those contracts to be artificial.

In January 2015, the court granted preliminary approval to the current class action settlement. The settlement class also was preliminarily certified and defined as follows: all persons that purchased, sold, or held NYMEX light sweet crude oil, New York Harbor heating oil and New York Harbor gasoline futures contracts at any time from March 2, 2007 through March 26, 2007, inclusive.The plaintiffs moved for final approval of the settlement.

The settlement provides for a guaranteed all-cash fund of $16.75 million to the class. In exchange, the plaintiffs and settlement class have agreed to release the defendants from all claims for losses on their transactions. Class members have the right to opt out if they do not have the same judgment as class counsel about the fair compensation provided in the agreement.

Settlement. The court found that the settlement was fair, reasonable, adequate, and in the best interests of the class. The settlement was the result of arm’s-length negotiations between experienced counsel representing the interests of the parties. Moreover, the class counsel and named plaintiffs adequately represented the settlement class for the purpose of entering into the settlement agreement.

The court noted that no members of the settlement class validly requested to be excluded from the settlement class and no objections to the proposed settlement have been submitted.

Attorney fees and incentive award. The court reviewed class counsel’s petition for attorney fees and determined that an award of $4.95 million was fair, reasonable, and adequate. Class counsel also was granted $237,935 as reimbursements for their expenses. Finally, the court concluded that the requested incentive payment for the class representatives was fair, reasonable, and adequate.

The case is No. 08-CV-6842.

Attorneys: Christopher Lovell (Lovell Stewart Halebian Jacobson LLP) for Roberto Calle Gracey. Paul E. Dengel (Schiff Hardin LLP) for Optiver US, LLC, Optiver Holding BV, and Optiver VOF.

Companies: Optiver US, LLC; Optiver Holding B.V.; Optiver VOF

Cases: Antitrust NewYorkNews