Regulatory Storm Hits TotalEnergies with $48 Million Fine for Market Manipulation

TotalEnergies (TTE) experienced a 3.07% decline, marking its second consecutive day of falling with a cumulative drop of 3.91% over the past two days.

Recently, TotalEnergies faced significant regulatory challenges as the United States Commodity Futures Trading Commission (CFTC) imposed a $48 million fine on the French oil giant's trading division. This penalty was a response to allegations that TOTSA TotalEnergies Trading SA attempted to manipulate the gasoline market.

The CFTC, in a statement released late Tuesday, highlighted that the attempts to manipulate related to futures contracts tied to a gasoline blend known as EBOB, predominantly used in Europe. According to the commission, this case is one of the latest in a series of enforcements against energy and commodity traders.

Earlier this year, Trafigura Group agreed to pay $55 million to resolve CFTC's charges of manipulating fuel oil benchmarks and obstructing employees' cooperation with regulators. Similarly, Glencore faced a $152 million penalty following years of legal scrutiny.

TotalEnergies’ case traces back to 2018 when the company allegedly profited from short positions related to EBOB futures by selling large quantities of the physical fuel at prices below the buyers' bid prices. By doing so, they aimed to lower the reported price of EBOB and enhance the value of the company's short positions.

The CFTC noted that TOTSA's traders were willing to accept reduced revenues from physical EBOB sales in exchange for potentially larger gains in their trading portfolio. The strategy was essentially to suppress the reported price of EBOB, consequently boosting the trader's overall profit from related short positions.

During the investigation, while TotalEnergies did provide some degree of cooperation, the company failed to promptly supply certain requested WhatsApp communications and did not adequately preserve these communications when requested. This non-compliance potentially led to critical evidence being unavailable.
In its enforcement statement, the CFTC emphasized the importance of cooperation and timely response to information requests in regulatory investigations. This case underscores the ongoing regulatory scrutiny in the energy trading sector and the substantial penalties companies face when violations are identified.