(Bloomberg) -- A group of British oil traders who made $700 million in a few hours failed to prevent regulators from obtaining their records, as the legal fallout from when oil markets collapsed below zero in April 2020 spilled into a London court.
Judge Alison Foster said the traders at Vega Capital London Ltd. must hand over information and documents about their activities to the U.K.'s Financial Conduct Authority, after a London court hearing on Wednesday. The FCA was asked to intervene on behalf of the U.S. Commodity Futures Trading Commission, which is leading the investigation.
A dozen individuals associated with Vega Capital are separately being sued in a U.S. class action suit that alleges they manipulated markets and violated antitrust laws by colluding to push the market down to unprecedented lows. The traders have argued they were simply following publicly available market signals, and that their behavior was “astute” rather than collusive.
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Evan Flowers, an attorney for the Vega traders, said they would no longer resist handing over the material to regulators following Judge Foster's decision.
“None of our clients did anything wrong by trading their own view of the market on April 20, 2020, and they remain confident the U.S. regulator will come to that conclusion after reviewing the evidence,” Flowers said in an emailed statement.
An investigation by Bloomberg in 2020 showed that traders at little-known Vega were some of the biggest players in crude oil futures the day prices went negative. Some of the group live or work in the same small town in Essex, and were assembled by an experienced pit trader named Paul Commins, known as “Cuddles.”
Messages revealed in the U.S. class action show them using a WhatsApp group called “Legends XXX” to urge each other to “keep selling.”
The price of crude oil fell below zero on April 20, 2020, reaching -$38 per barrel, the lowest level in history, amid plummeting demand caused by the Covid pandemic, and a squeeze on storage space. While the market recovered swiftly, the scale of the crash caused investor losses and led to questions about the integrity of mechanisms for trading the world's most popular commodity.
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