‘No Citizens’ Arrests for Commodities Fraud’ in Total Gas Case

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By Jennifer Bennett

A group of natural gas derivatives traders lost their bid to sue Total Gas over alleged market manipulation because they lack a plausible injury.

The traders couldn’t bring claims against Total Gas & Power North America Inc. for alleged market manipulation, even though the Commodity Futures Trading Commission and the Federal Energy Regulatory Commission had already sued the firm, because they didn’t show plausible harm, the U.S. Court of Appeals for the Second Circuit said May 4.

“There are no citizens’ arrests for commodities fraud, and, in any case, the sheriffs in that particular town are already on the case,” the court wrote in its 3-0 opinion. The traders “pled enough facts to make their claim of injury colorable but not enough to make it plausible,” the court said.

Plaintiffs must allege some type of injury to show they have the right—or standing—to sue, which in this case, they did. However, they have to allege a plausible—not just possible—injury to show the suit they’re bringing has merit, according to the court.

The traders alleged that Total Gas’s manipulation of certain markets could’ve affected the other markets they traded in, but they didn’t show the manipulation affected those markets, the court said. The traders didn’t allege any injuries from direct or third-party contracts with Total Gas, but instead said Total Gas’s manipulation in certain areas distorted prices throughout the market as a whole, the opinion said.

The CFTC settled with Total Gas for $3.6 million in 2015 and the FERC’s case, seeking more than $213 million, is ongoing, according to the court.

The case is Harry v. Total Gas & Power North America Inc. , 2d Cir., No. 17-1199-cv, opinion released 5/4/18 .

To contact the reporter on this story: Jennifer Bennett in Washington at jbennett@bloomberglaw.com

To contact the editor responsible for this story: Seth Stern at sstern@bloomberglaw.com

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