Securities
Commodity Market Trading and Market Manipulation
Overview
Engagements
Publications

Brattle is an industry leader in the detection and analysis of manipulative behavior in commodity, energy, financial, and securities markets. We provide analytical support related to internal and government investigations of suspicious behavior and the associated expert testimony in government enforcement actions and related civil litigation.

We advise and assist clients in the U.S. and EU with the implementation of compliance programs and development of internal surveillance systems. We also assist international government agencies in the establishment of market monitoring and enforcement regimes. Brattle’s finance and energy professionals combine to provide deep expertise in the regulatory and physical dimensions of commodities, securities, and financial markets, with a thorough understanding of the use of derivatives and other hedging practices used in broader portfolio management.

Our approach to the analysis of manipulation claims is based on a logical framework that is used to evaluate behavior in a manner that is consistent with the methods used in agency enforcement actions. This approach allows us to deconstruct trading portfolios to confirm or refute manipulative activity such as uneconomic trading and fraud, as well as to distinguish legitimate trading practices like hedging from speculative positions that could benefit from manipulation.

We are well-versed in the anti-manipulation rules of the Securities and Exchange Commission (SEC), Federal Energy Regulatory Commission (FERC), Commodity Futures Trading Commission (CFTC), and Federal Trade Commission (FTC), as well as equivalent rules in place in the European Union (REMIT, MAD and the pending MAD II). We have also worked on manipulation cases brought pursuant to state laws or actions by the U.S. Department of Justice.

We provide clients with a holistic perspective concerning the types of behavior that may be deemed manipulative, one that is consistent with past enforcement outcomes and current enforcement cases.

Our services to clients in this area include:

  • Analyses related to investigations, enforcement actions, and litigation, including:
    • Initial assessments and analysis of behavior of concern: On learning of a government inquiry or in response to potential litigation concerning manipulation claims, clients and their counsel need to quickly assess whether such actions are groundless or have merit. We can assist this effort in a logical and efficient manner that is consistent with the approach used by the agencies in these cases.
    • Assistance with deposition preparation and discovery: It is imperative that potential deponents understand the full ramifications of their activity before submitting to agency discovery. Our framework and analytical capabilities greatly assist such efforts by providing a foundation for understanding the weight of possible lines of questioning before they may arise.
    • Assessment of posture for settlement: Where potentially manipulative exposure is found, we assist clients is determining the optimal posture for settlement such that exposure to civil penalties and damages are minimized. Given the increased possibility of criminal exposure associated with manipulation claims, we will assist client in defending against assertions of fraud and/or conspiracy that underlie such prosecutions.
    • Expert testimony and litigation support: Brattle has provided expert testimony in support of agencies, plaintiffs, and defendants to market manipulation claims. Our analytic framework provides a thoroughly agnostic mechanism for the analysis of such claims, resulting in a consistent approach that is equally advantageous and applicable to all potential claimants and defendants.
  • Compliance seminars and implementation of compliance programs: We assist companies in communicating to their traders and compliance personnel meaningful guidance as to behavior that may run afoul of the agencies’ anti-manipulation rule, and provide assistance in the creation and maintenance of meaningful compliance programs.
  • Internal or market surveillance: Brattle assists clients in creating screens for the detection and analysis of potentially manipulative behavior. Through counsel, we assist clients in the implementation and auditing of these screening tools to assist in the optimization of screening methodologies to minimize the likelihood of false positives and false negatives and the resulting waste of resources.
  • Internal analysis of suspicious behavior and agency self-reports: We regularly assist clients in evaluating the significance of trading behavior that may run afoul of agency manipulation rules and/or rules which govern disruptive trading practices. Where directed by counsel, we support clients in self-reporting behavior of concern to the relevant agencies.

Book
Market Power and Market Manipulation in Energy Markets: From the California Crisis to the Present
April 2015
Gerald A. Taylor, Shaun D. Ledgerwood, Romkaew P. Broehm, and Peter S. Fox-Penner
Published by PUR Inc.
Article
Market Manipulation Push is Widening the Compliance Gap
January 23, 2015
Published in Risk.net
Article
Using Virtual Bids to Manipulate the Value of Financial Transmission Rights
November 2013
Published in The Electricity Journal, Vol. 26, Issue 9
Article
Uneconomic trading and market manipulation
July 2013
Published in Energy Risk
Presentation
A Unifying Approach to Market Manipulation Compliance
June 2013
Presented at the Platts European Gas and Power Trading Conference, London, UK
Presentation
Market Manipulation post Hunter vs. FERC: A Framework for Unified Analysis
June 2013
Panel presentation delivered at the Harvard Electricity Policy Group’s 71st Plenary Session, Calgary, AB
Article
A Framework for Analyzing Market Manipulation
September 2012
Published in Review of Law & Economics, Volume 8, No. 1
Article
A Comparison of Anti-Manipulation Rules in U.S. and EU Electricity and Natural Gas Markets: A Proposal for a Common Standard
April 2012
Published in Energy Law Journal