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Bloomberg News: Shell pays $300,000 to settle case: Houston unit one of two accused of 'fictitious' deals

Posted Thursday January 5, 2006
Royal Dutch Shell agreed Wednesday to a $300,000 settlement of charges that two of its subsidiaries engaged in “fictitious” crude oil futures trades on the New York Mercantile Exchange.
Shell Trading U.S., based in Houston, and London-based Shell International Trading and Shipping will pay $200,000 to settle the Commodity Futures Trading Commission case. Nigel Catterall of Sugar Land, then head of the futures desk for the U.S. subsidiary, will pay $100,000, the agency said.
Catterall and Shell engaged in prearranged trades for oil futures “on at least five occasions between November 2003 and March 2004,” the CFTC said in a prepared statement Wednesday..
Traders for the two subsidiaries agreed in advance on the quantities and delivery month for contracts to be traded on Nymex. The price was not prearranged, and the contracts traded at prevailing market prices. Shell neither admitted nor denied any wrongdoing in the settlement.
“We are pleased that this matter has been brought to a close,” Shell spokeswoman Darci Sinclair said. Catterall, who was a trader for the British subsidiary until September 2003, is still employed by Shell Trading U.S., Sinclair said. She said she didn't know what position he held.
The CFTC said Shell cooperated in the investigation.
A commission spokesman in Washington, Dennis Holden, would not comment on how the trading violations came to light.
The commission said in the settlement that it defines fictitious sales as “the use of trading techniques that give the appearance of submitting trades to the open market while negating the risk or price competition incident to such a market.” 

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