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By Douwe Miedema
WASHINGTON, April 14 (Reuters) - Arcadia Petroleum andParnon Energy have entered talks to settle accusations by theCommodity Futures Trading Commission that they fixed thephysical crude oil market, possibly ending one of its mosthighly-publicized oil manipulation cases.
The derivatives regulator in May 2011 sued two well-knowntraders, James Dyer of Parnon Energy and Nick Wildgoose ofArcadia, and their firms for allegedly making $50 million bysqueezing markets in 2008.
But in a March 17 letter signed by a CFTC representative andthe law firm representing the defendants, both parties asked ajudge to push back a scheduling order, because they had enteredmediation talks to avoid a trial.
"The parties have agreed in principle to enter intomediation," the letter to U.S. District Judge William Pauleysaid. If the parties reach an agreement, the case won't go totrial, a source familiar with the matter said.
The mediation efforts are part of the public record, buthave not been previously reported. The CFTC declined comment.
The CFTC case alleges that traders, both of whom previouslyworked at BP Plc, amassed large physical positions at animportant U.S. oil trading hub to create the impression of tightsupplies that would boost prices.
Later they dumped those barrels back onto the market,causing prices to crash and racking up profits from positionsthey had accrued in futures markets, the suit said.
Parties in a related case were also seeking settlement,court documents showed. This case was originally filed byderivatives trader Stephen Ardizzone, who is seekingclass-action status on behalf other investors.
"A proposal was made for mediation and we've agreed to it inconnection to both cases," the source said.
Plaintiffs in the second case - who now also include AISFutures Management LLC and Adams Affiliaties - claimed thedefendants had manipulated futures over a longer time periodthan the CFTC had asserted.
Arcadia Petroleum and Parnon Energy, which are owned byNorwegian billionaire John Fredriksen, have denied the charges,and have unsuccesfully sought to dismiss the cases.
The cases are CFTC vs. Parnon Energy, Inc. et al, Case No11-cv-3543 and Stephen Ardizzone et al vs. Arcadia Petroleum,Parnon Energy et al, Case No 11-cv-03600, both in the U.S.district court, Southern District of New York. (Reporting by Douwe Miedema Additional reporting by JosephineMason in New York; Editing by James Dalgleish)
