'Drunken' Broker Sent Oil to 8-Month High in 2009: Report
On June 30, 2009, oil mysteriously jumped by more than $1.50 a barrel during the night, to reach its highest price in eight months, the kind of swing that is caused by a major geopolitical event.
The amazing, true cause of this price spike has now been released by a Financial Services Authority investigation (FSA).
Although not authorized to invest company cash in trades, Steve Perkins, a long standing, senior broker at PVM Oil Futures, had managed to spend $520 million on oil futures contracts throughout the night, the FSA said.
On the morning of the 30th, an admin clerk called Perkins to ask why he had bought 7 million barrels of crude during the night. Perkins had no recollection of the transactions, and it turned out that he had made the trades during a “drunken blackout," according to the FSA.
By the time PVM realized the transactions had not been authorized by a client, they had incurred losses of $9,763,252.
Between the hours of 1:22 a.m. and 3:41 a.m., Perkins gradually bought 69 percent of the global market, while driving prices up from $71.40 to $73.05, by bidding higher each time.
At 6:30 a.m., presumably sobering up and realizing what he’d done, he sent a message to his managing director claiming an unwell relative meant he would not be able to make it into work.
Following an official investigation Perkins admitted to having a drink problem, had his trading license revoked for five years, and was given a fine of £72,000 ($116,878).
The FSA has said that they will re-approve his license after the five-year period, if he has recovered from his drinking problem, although they warned that,“Mr Perkins poses an extreme risk to the market when drunk.”
—This story originally appeared on Oilprice.com. Click here to read the original story.