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Traders Who Made $500 Million on Oil Crash to Stay Anonymous

May 19, 2021, 9:41 PM

A dozen commodities traders can keep their identities under wraps, for now, as they fight antitrust claims over their alleged scheme to make $500 million in a single day by engineering the unprecedented crash of oil futures into negative price territory last year, a federal judge in Chicago ruled Wednesday.

Judge Gary Feinerman granted the unopposed request, ordering both sides to keep referring to the individual defendants as traders 1 through 12 and individual A until or unless he lets the proposed class action to move forward in the U.S. District Court for the Northern District of Illinois.

But the ruling is “without prejudice to any party or nonparty” that may seek to unseal their identities before then, Feinerman said in a one-page order.

The lawsuit targets Vega Capital London Ltd., the U.K. commodities house that made a killing when crude oil futures fell $56 a barrel on April 20, 2020, to close at -$37 on the New York Mercantile Exchange—the only time oil has ever gone negative on the exchange.

The suit, filed in August, accuses Vega and its traders of dumping certain May 2020 oil futures contracts at a loss in a coordinated scheme to drive down the cost of “trading at settlement” contracts pegged to the closing price that day, of which they’d bought “a large volume” beforehand.

Prices recovered to $10 a barrel the next day, allegedly giving Vega a huge windfall.

Vega and the traders, meanwhile, insist they did no more than observe the market signals forecasting a “once-in-a-century storm” caused by the Covid-19 pandemic.

Feinerman’s decision comes a day after Vega and Mish International Monetary Inc., the coin collector leading the case, filed a joint motion urging the judge to keep a lid on the traders’ identities, which are under seal with the court.

The trading house cited concerns “that, if identified publicly, the individual traders may be subjected to harassment at their homes and workplaces overseas and would fear for their personal safety and that of their families—including because of the magnitude of their alleged trading profits.”

Though Mish partly disputed the scope of the protective order, it conceded in the filing Tuesday that keeping the traders anonymous had moved the case forward by encouraging Vega to produce confidential information it might otherwise have fought over.

In addition to granting the sealing request Wednesday, Feinerman set a status hearing for Aug. 5.

Mish is represented by Lovell Stewart Halebian Jacobson LLP and Miller Law LLC. Vega is represented by Akerman LLP. The traders are represented by MoloLamken LLP and Dechert LLP.

The case is Mish Int’l Monetary Inc. v. Vega Capital London Ltd., N.D. Ill., No. 20-cv-4577, 5/19/21.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com