Oil and Gas Fraud Working Group to Focus on Energy Markets
On April 21, 2011, U.S. Attorney General Eric Holder announced the formation of an Oil and Gas Price Fraud Working Group to focus specifically on the detection of fraud in the energy markets. This working group is a subgroup of the Financial Fraud Enforcement Task Force, which reports directly to the Attorney General.
Numerous federal and state agencies are represented. These agencies have a tremendous scope of investigative powers, which makes almost any segment of the oil and gas market susceptible to scrutiny. Agencies involved include:
- Department of Justice
- National Association of Attorneys General
- Commodity Futures Trading Commission
- Federal Trade Commission
- Department of the Treasury
- Federal Reserve Board
- Securities and Exchange Commission
- Department of Agriculture
- Department of Energy
The creation of the working group was driven by the public uproar over the rapidly rising gas prices. The group will examine whether there is any evidence of manipulation of oil and gas prices, collusion, fraud, or misrepresentation at the retail or wholesale levels that violates state or federal laws and harms consumers or the federal government as a purchaser of oil and gas.
The idea to create the working group is a spin-off from the President’s request last month that the Justice Department investigate price gouging at the pump.
The Working Group has a broad mandate to:
- Monitor oil and gas markets for potential violations of criminal or civil law.
- Evaluate developments in commodities markets and examine investor practices, supply and demand factors and the role of speculators and index traders in oil futures markets.
As with any task force or working group, you can expect the sharing of information among the member agencies to take advantage of the group’s investigative synergies.
The Attorney General promises “swift action” if fraud or other illegal activity is found. However, he acknowledges there are lawful reasons for increases in gas prices, given supply and demand.