Optiver bullied the oil markets in the course of 24 days back in 2007. They used their software program named “The Hammer” to manipulate the close of oil futures. By doing so it made a sure profit, because it had build up big positions in TAS contracts (Trade At Settlement). See this four page pdf from the CFTC. A nice read, the watchdog even taped their the “cover up fairy tale”. And of course this perfect quote:
You should milk it for right now because you never know how long it’s going to last.
Many expensive years of litigation
It has been a long time. Back in 2007 even HFT was hardly a known phenomenon, this website didn’t exist and neither did Zerohedge. In the meantime all three responsible traders Bastiaan van Kempen, Christopher Dowson and Randal Meijer have left the firm. Some of the trading bans have expired by now.
Optiver settled three years ago with the CFTC. They repaid the profit of $1 million and a $13 million fine. Always assumed case closed.
Optiver settles for $16.75m
Alas for Optiver, it wasn’t over yet. A class action of a group of investors kept on bullying them. Wednessday June 24th they reached a settlement with Optiver. A settlement is agreed of $16.75 million – without admitting any wrongdoing. According to the company statement they decided that it was better to put this matter behind it through settlement and to move forward.
Legal talk about the wrongdoing of course. If you are agreed to pay a combined sum of almost $30 million no one will assume you’ll be innocent. Anyway, legal costs in this case will have been huge. This comment in 2009 gave a sharp estimate for the total damage.