The Cartel: How BP Got Insider Tips Through a Secret Chat Room | Hacker News Reader

The Cartel: How BP Got Insider Tips Through a Secret Chat Room

bloomberg.com

45 pointsrandomname222 comments

Um, various comment sections and article verbiage aside, is "insider trading" the issue here? It seems like this was currency markets, which I'm not hugely familiar with... but I know that with regard to commodities there's not really such a thing as "insider trading" in a legal sense and I'd weakly expect the situation with currencies to be similar.

If you read about what was actually shared, though, "tips about forthcoming trades, details of confidential client business and discussions of stop-losses", it sounds like there may have been some serious breeches of fiduciary duty on the part of the people providing the information.

I'm not sure there is such a thing as insider trading outside of equity markets. Having said that, I'm sure there is some way that similar actions could be spun as price manipulation or something of the sort.

confidentiality, conflict of interest, systemic risk not insider trading: http://www.fca.org.uk/news/fca-fines-five-banks-for-fx-faili...

Actually yes, BP has absolutely been acting like a collusive, insider trading hedge fund if these accusations are proven. The similarities to Enron are uncanny.

As per the article, BP is denying everything, and so the article is very careful in phrasing BP's involvement:

"While there’s no evidence that any BP traders were members of the Cartel, Usher participated in at least one chat room with White, according to a person who has examined conversations that included both men. It couldn’t be determined from the messages reviewed by Bloomberg News who sent the information to BP or whether BP employees acted on any of the tips."

Except they did: "Traders at BP haven’t been accused of any wrongdoing. Last year, within hours of regulators announcing probes, the chats between BP and the banks were shut down, people with knowledge of the matter said. Soon after, a compliance officer was placed on the desk for the first time, one of them said."

Not exactly what one would do if one was "innocent".

Interesting tidbit on how the Bank of England may have been involved in all this rigging, FX market manipulation and criminal abuse of other market participants:

"[Usher] joined JPMorgan as head of spot foreign exchange in 2010, where he became a member of the now-defunct Bank of England’s Chief Dealers Sub Group, a collection of about a dozen currency traders and central bank officials who met at restaurants and bank offices to discuss industry developments."

Which is why the Bank of England itself may have had to scapegoat its own sacrificial lamb to avoid any further connection to this criminal cartel:

Chief FX dealer for the Bank of England, Martin Mallett, on November 12 "was dismissed by the Bank of England yesterday for “serious misconduct relating to failure to adhere to the Bank’s internal policies,” according to a statement by the central bank today."

I didn't say they were innocent of any wrongdoing. I said that the wrongdoing wasn't "insider trading", which is what most people have been discussing.

Price collusion and market manipulation are not "insider trading", nor is breach of fiduciary responsibility. Insider trading is probably legal in the markets they were operating in, and it likely should be (in commodities, "you can't raise your price just because your costs went up - that's not public information" is obviously ridiculous; I'm slightly less convinced about currency). What seems to have happened was worse than insider trading.

Those are some very serious accusations. This has the ring to it of the first of a series of domino stones falling over.

Not the first, this is the middle of the series, there have already been fines.