Court blocks ‘Essex boys’ traders’ bid to overturn City watchdog’s decision

A group of oil traders, dubbed the “Essex boys,” who made $700m from the collapse in oil prices that saw crude trade negatively at the start of Covid-19, have failed in their bid to overturn a decision by the UK’s financial watchdog to assist US authorities.

Traders linked to oil brokerage Vega Capital London Ltd have been blocked from pursuing a judicial review of the Financial Conduct Authority’s (FCA’s) decision to provide assistance to the US Commodity Futures Trading Commission (CFTC).

The investigations come after twelve Essex-based traders, linked to Benfleet headquartered brokerage Vega Capital, generated hundreds of millions in profits through a series of trades on the West Texas Intermediate (WTI) oil futures exchange, on 20 April 2020.

The traders, who were largely based around the affluent Essex village of Theydon Bois, stand accused of using aggressive trading tactics to drive down the price of oil on the WTI exchange, before generating huge profits on the back of negative oil prices.   

The Essex traders’ activities have subsequently come under scrutiny from British and American authorities, including the FCA, and the US Attorney’s Office. The oil traders are also facing the prospect of a class-action lawsuit brought forward by investors who claim the traders’ manipulated markets and violated anti-trust laws.

In seeking a judicial review of the FCA’s decision, the oil traders had sought to block the FCA from forcing them to hand over information to assist a CFTC investigation into trades carried out on a US derivatives exchange by seeking a judicial review.

However, the Court of Appeals refused the traders permission in upholding a lower court’s earlier decision to refuse the Essex boys’ bid for a judicial review.   

Under the Financial Services and Markets Act 2000, the FCA is allowed to use its powers to assist foreign regulators in carrying out investigations. Both the FCA and CFTC are also signatories to a multi-lateral memorandum of understanding which commits them to providing relevant assistance to one another.

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA welcomed the court’s decision as he said “the powers to seek information needed for investigations by the FCA, including where doing so is to assist a foreign regulator, are vitally important in ensuring investigations involving multiple jurisdictions are able to be conducted properly.”

“The FCA will not permit subjects of international investigations who are located in the UK to hide behind unmeritorious claims or to delay international investigations through abuse of legitimate remedies,” Steward said.