08/28/2008 11:22 FAX 312 353 4324 141002/004 

RECEIV.ED 

UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION JUN 2~ 8 201 

U.S. COMMODITY FUTURES 

TRADING COMMISSION, 

Plaintiff, 

CIVIL ACTICOO c 

Complaint for Injunctive and 

v. 

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) 

) 

) 

) 

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) 

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) 

) 

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Other Equitable Relief and u~E CAS1\LLU 

Civil Monetary Penalties J U\IJ 

BP PRODUCTS NORTH AMERICA, INC, Under the Commodities Exchange 

Act 

Defendant. 

The United States Commodity Futures Trading Commission ("Commission" or "CFTC"), 

by its attorneys alleges as follows: 

I. SUMMARY 

1. As is more fully alleged below, Defendant BP Products North America, Inc. 

("BP" or "Defendant"), by and through its employees, including but not limited to, Donald 

Cameron Byers ("Byers"), Martin Marz ("Marz"), James Summers ("Summers"), Mark Radley 

("Radley"), Dennis Abbott ("Abbott") and Cody Claborn ("Claborn") among others, has 

engaged in acts and practices that constitute violations of the Commodity Exchange Act, as 

amended (the "Act"), 7 U.S. C. §§ 1 et seq. (2002). In short, BP unlawfully attempted to 

manipulate and did manipulate the price of February 2004 TET physical propane by comering 

the market for February 2004 TET physical propane. Further, BP also attempted to manipulate 

the price of April 2003 TET physical propane, again by seeking to comer the April 2003 TET 

physical propane market. 

JUN 28 2006 13:35 312 353 4324 PAGE.02 
2. A "comer" is where an entity seeks to, and holds, a dominant or controlling 

position in a commodity market for the purpose of being able to command or dictate the price at 

which it will sell the commodity.' 

3. Radley, while employed by BP, developed and directed the execution of a 

speculative trading strategy in which BP cornered the February 2004 "TET" physical propane 

market. See Attachment 1, Glossary. Radley accomplished this by directing other BP 

employees to establish a dominant and controlling long position in February 2004 TET physical 

propane by purchasing an overwhelming amount of physical propane that required delivery of 

TET physical propane by the end of February 2004. Radley directed other BP employees to 

establish a position in February 2004 TET physical propane which exceeded all available 

inventory ofTET propane. BP employees followed Radley's instructions. As a result, BP 

cornered the February 2004 TET propane market. 

4. After acquiring this dominant and controlling position in the February 2004 TET 

physical propane market, Radley directed other BP employees to sell a portion of the February 

2004 TET propane BP acquired to market participants who were "short" to the market at prices 

dictated by BP. Because BP possessed a dominant and controlling position in February 2004 

TET propane, many of the "shorts" on at least February 27, 2004 had no choice but to buy 

February 2004 TET propane from BP. Because BP possessed a dominant and controlling 

position in February 2004 TET physical propane, BP, by and through its employees, was able to 

dictate the price at which BP would sell the February 2004 TET propane to the shorts on at least 

February 27, 2004. 

1 Individuals, including BP employees discussed in this complaint, sometimes use the term "squeeze" as a synonym 

for a "corner." 

2 
5. Radley executed BP's manipulation and comer of the February 2004 TET 

physical propane market with the knowledge, advice, and consent of Byers, Marz, and Summers, 

all of whom had direct or indirect control over Radley and other BP employees. See Exhibit A. 

6. February 2004 was not the first time that BP and Radley engaged in an effort to 

comer the TET physical propane market. BP and Radley attempted to manipulate the price of 

TET physical propane in April 2003 through a similar strategy of taking a dominant and 

controlling long position in April 2003 TET physical propane. Indeed, Radley described the 

April2003 TET propane trading strategy as a "trial run" of the February 2004 TET trading 

strategy. 

7. As more fully described below, the actions of Radley and other BP employees 

acting at his direction in the TET physical propane market between March 2003 and July 2004 

("relevant period") violated Sections 6(c), 6(d), and 9(a)(2) ofthe Act, 7 U.S.C. §§ 6(c), 6(d), 

13(a)(2). Byers, Marz and Summers had control over the activities of Radley and other BP 

employees in February 2004. Because Radley and other BP employees acting at his direction 

violated the Act by engaging in conduct that was within the scope of their employment at BP, BP 

is vicariously liable for all violations pursuant to Section 2(a)(l)(B) of the Act, 7 U.S.C. § 

2(a)(l)(B) (2002). 

8. Accordingly, pursuant to Section 6c of the Act, 7 U.S.C. §13a-l, the Commission 

brings this action to enjoin such acts and practices, and compel compliance with the Act. In 

addition, the Commission seeks civil penalties and such other ancillary relief as the Court deems 

necessary or appropriate under the circumstances, including, but not limited to, disgorgement of 

unlawful profits, restitution and damages. 

3 
9. Unless restrained and enjoined by this Court, there is a reasonable likelihood that 

Defendant will continue to engage in the acts and practices alleged in this Complaint or in 

similar acts and practices, as more fully described below. 

II. JURISDICTION AND VENUE 

10. This Court has jurisdiction over this action pursuant to Section 6c of the Act, 7 

U.S.C. § 13a-1, which authorizes the Commission to seek injunctive relief against any person, or, 

to enforce compliance with the Act, whenever it shall appear to the Commission that such person 

has engaged, is engaging, or is about to engage in any act or practice constituting a violation of 

any provision ofthe Act or any rule, regulation or order thereunder. 

11. Venue properly lies with this Court pursuant to Section6c(e) ofthe Act, 7 U.S.C. 

§ 13a-1 (e), in that Defendant is found in, inhabits and transacts business in this District, and the 

acts and practices in violation of the Act have occurred, are occurring, or are about to occur 

within this District. 

III. THE PARTIES 

12. Plaintiff Commodity Futures Trading Commission is an independent federal 

regulatory agency that is charged with the responsibility for administering and enforcing the 

provisions ofthe Act, 7 U.S.C. §§ 1 et seq., and the regulations promulgated thereunder, 17 

C.F.R. §§ 1 et seq. One of its core responsibilities is to protect the public interest by deterring 

and preventing price manipulations of the commodity markets or futures markets, or other 

disruptions to market integrity. 7 U.S.C. § 3 (2002). 

13. Defendant BP PRODUCTS NORTH AMERICA, INC. ("BP") is a wholly 

owned subsidiary of BP plc, one of the largest energy companies in the world. BP is also the 

largest supplier of natural gas liquids, including propane, in North America. BP's North 

4 
American Headquarters are located at 28100 Torch Parkway, Warrenville, Illinois. One ofBP's 

business units is BP's North America Gas and Power business unit ("NAGP"). 

IV. RELEVANT INDIVIDUALS 

14. Donald Cameron Byers ("Byers") was the Chief Operating Officer for BP in February 

2004 and April2003 and is currently the President and CEO ofBP's NAGP. 

15. Martin Marz ("Marz") was the Compliance Manager for BP's NAGP during the 

relevant period. 

16. James Summers ("Summers") was the Vice President ofNatural Gas Liquids 

Trading for BP in February 2004 and reported directly· to Byers. 

17. Mark Radley ("Radley") was the Trading Manager ofNatural Gas Liquids 

Trading for BP in February 2004 and April 2003 and reported directly to Summers. 

18. Dennis Abbott ("Abbott") was the self-described "second-in-command" on the 

natural gas liquids (''NGL") Trading Bench in February 2004, and was perceived as the trading 

bench leader in Radley's absence. Abbott traded all Natural Gas Liquids ("NGLs"), and 

participated in the execution ofBP's February 2004 TET propane strategy. Abbott was placed on 

paid administrative leave during the Division's investigation in this matter, and was recently fired 

by BP for his actions in connection with BP's February 2004 TET propane trading strategy. 

19. Cody Claborn ("Claborn") was the primary trader for TET propane in February 2004 

and participated in the execution ofBP's February 2004 TET propane strategy. Claborn was placed 

on paid administrative leave during the Division's investigation in this matter, and was recently fired 

for his actions in connection with BP's February 2004 TET propane trading strategy. 

5 
V. FACTS 

A. The TET Propane Market and Other Propane Markets 

20. Propane is a by-product of natural gas processing and petroleum refining. 

Because propane is a by-product ofthese two processes, the volume of propane available from 

these sources will not necessarily immediately adjust to changes in the supply and demand of 

propane. 

21. The term "TET" is an acronym for Texas Eastern Transmission Corporation. The 

phrase "TET propane" refers to propane that is deliverable at the TEPPCO storage facility in 

Mont Belvieu, Texas or anywhere within the TEPPCO system. "TEPPCO" is an acronym for 

Texas Eastern Products Pipeline Co, LLC. The TEPPCO storage facility is the primary source 

for propane used in residential, commercial, and agricultural heating in the northeastern United 

States via the TEPPCO pipeline. 

22. The TEPPCO pipeline runs from Mont Belvieu, Texas up through Ohio, into New 

York, Pennsylvania and Illinois. The TEPPCO pipeline is the only pipeline that transports 

propane from Mont Belvieu to the Northeast and Midwest regions of the United States. Only 

propane within the TEPPCO system (comprised of its storage cavern and its pipeline) is TET 

propane. At any given time, the total TEPPCO system inventory of propane represents the total 

available supply of TET propane. 

23. The TEPPCO pipeline is unidirectional, meaning that the TEPPCO pipeline only 

flows in a single direction, i.e., it transports propane out of Mont Belvieu, Texas. Once propane 

has left the TEPPCO storage facility and enters the pipeline, the propane cannot be moved back 

into the TEPPCO storage facility via the pipeline. Prices of TET propane affect the price of 

6 
propane purchased by consumers, including residential consumers in Illinois, at Locations along 

the TEPPCO pipeline 

24. Inventories in TET propane are generally built up during the spring and summer 

months and typically peak by the end of September. During the winter heating season, TET 

propane inventory withdrawals occur. TET propane inventories are typically lowest at the end 

ofthe home heating season in February and March. 

25. TET propane is a type of propane recognized as being distinct from other types of 

propane by the propane industry. The market for TET propane is distinct from markets for other 

types of propane. The propane industry recognizes that TET propane has its own market price 

distinct from the prices for other types of propane. TET propane is a commodity in interstate 

commerce. 

26. Aside from TEPPCO, Mont Belvieu has other individual, privately owned storage 

caverns. Also located in Mont Belvieu are storage facilities owned and operated by Enterprise 

Products Partners, LP and during the relevant period Dynegy Liquids Marketing and Trading, 

LP. As noted above, propane in the TEPPCO storage facility is identified as "TET" propane by 

the propane industry. By comparison, propane in other storage facilities at Mont Belvieu is 

designated as "non-TET" propane by the propane industry. 

27. The United States is a net importer of propane. Imports provide an important 

source of supply when consumption exceeds available supplies of propane from domestic 

production and inventories. 

28. Propane demand in the United States comes from several different sectors, but the 

Largest sectors are the residential/commercial heating sector and petrochemical industry which 

uses propane in the manufacturing of plastics. 

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29. Residential/commercial demand for propane constitutes approximately 43% of 

domestic demand for propane. Because the majority of this usage is for heating, the demand 

from this sector is highly seasonal and dependent on weather. Residential and commercial 

consumption of propane for heating is most prevalent in the Northeast and upper Midwest parts 

of the United States. Propane is the fourth most important source of residential heating in the 

United States. As of 1996, approximately 8.1 million households depended on propane for one 

use or another (excluding propane gas grills), and by 2003 approximately 6.88 million 

households used propane as their primary heating fuel. Propane is most commonly used to 

provide energy in areas not serviced by natural gas distribution systems, i.e., propane is 

commonly used in rural regions. 

30. As noted above, the primary source of propane for residential heating in the 

Northeast United States is the TEPPCO system. Because it is a heating fuel, demand from the 

residential and commercial markets tends to be inelastic, or price insensitive. When prices for 

propane increase quickly, consumers of propane in the residential/commercial sector are 

generally unable to switch to other fuel sources for heating and, therefore, must either pay the 

price being offered to them by propane merchants, or forego using propane as a source of 

heating. 

B. Propane Trading 

31. Producers, marketers and consumers of propane trade propane contracts in a 

variety ofways, including propane futures contracts on the New York Mercantile Exchange 

("NYMEX") and other types of contracts in the over-the-counter ("OTC") market. 

32. In the OTC market, propane is traded through direct, bilateral transactions 

between counterparties, through voicebrokers, and on an electronic facility known as 

8 
"Chalkboard." Voicebrokers generally do not take title to propane and serve primarily to 

negotiate and execute deals between willing buyers and willing sellers. Similarly, Chalkboard 

allows parties to post bids and offers and then execute transactions in propane. Chalkboard also 

does not take title to propane. 

33. Prices ofTET propane affect the price of the NYMEX futures contract for 

propane, in part, because the NYMEX propane contract provides for delivery of propane at 

TEPPCO. 

34. In the OTC market, propane trades are generally in lots of 1000 barrels ("bbls"). 

Each barrel is the equivalent of 42 gallons of propane. Prices for propane trades or contracts are 

quoted, negotiated and executed in 1/8th cent per gallon ("cpg") increments. 

35. The Oil Price Information Service ("OPIS") publishes a daily newsletter which 

includes, among other things, market commentary and a daily index of prices for both TET 

propane and non-TET propane. The prices published by OPIS include a daily low, a daily high 

and a simple average of these two prices which is known as the "OPIS average." The propane 

industry uses OPIS as a source for determining the price at which they buy and sell TET 

propane. 

36. In the OTC market, propane trades may either be settled through physical delivery 

or settled financially, i.e., money is exchanged between the parties. 

37. Propane trades in the OTC market may also be designated as "any" or "wet." A 

transaction involving "any" propane calls for delivery of the propane at any time during the 

contract month up until the last day ofthe contract month. 

38. A transaction involving "wet" propane requires delivery of the propane on a 

specific date within the contract month. 

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C. BP's Corporate Structure and Business in Propane 

39. BP is a producer, marketer and consumer of commercial propane in the United 

States. BP's production, transportation and retail sales of commercial propane are handled by 

BP's Natural Gas Liquids Business Unit ("NGLBU"). 

40. According to BP's website, it is the "#1 supplier ofNGLs in North America, 

marketing over 500,000 barrels per day ofliquids including propane and butane." BP's trading 

of propane is handled by BP's NAGP. During the relevant period, all relevant individuals were 

employed with the BP's NAGP. 

41. Within the NAGP, BP's trading of propane throughout North America was 

handled by the Natural Gas Liquids Trading Bench ("Trading Bench"). The Trading Bench 

bought and sold propane in the name of BP. 

42. Consistent with industry practice, during the relevant period, BP recorded the 

Trading Bench members' telephonic communications. BP traders are aware that their 

conversations are recorded. 

43. On or about February 2004, Summers was the Vice President ofNatural Gas 

Liquids Trading and Marketing. As Vice President, Summers had supervisory responsibility for 

the trading activities of the Trading Bench. Summers directly or indirectly controlled Radley's 

conduct described in this complaint. 

44. During the relevant period Radley was the Trading Bench Manager. As the 

Trading Bench Manager, Radley was responsible for the management of"all aspects of the dayto-day trading activities" of the Trading Bench. Radley was also responsible for monitoring and 

enforcing "compliance with all internal assurance and controls, as well as external regulations 

and securities laws." 

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45. During the relevant period, employees Abbott, Claborn, Carrie Kienenberger 

("Kienenberger") and Tim Morby ("Morby") traded TET propane on behalf of BP and at 

Radley's direction. 

46. During the relevant period, Marz was the Compliance Manager for the NAGP. 

Marz was responsible for ensuring that the NAGP was complying with all appropriate rules and 

regulations, including laws, trading ethics, and company policies regarding the manipulation of 

pnces. 

47. During the relevant period, Byers was the Chief Operating Officer of the NAGP. 

Byers was responsible for, among other things, the development, implementation, and execution 

of trading and marketing strategies. Byers was also responsible for the oversight for the NAGP's 

risk management and for ensuring that appropriate trading processes, systems and controls were 

in place. 

D. BP Corporate Policies on Market Manipulation 

48. At all times relevant to this lawsuit, BP maintained a company policy entitled 

"Guidelines for Conduct by BP's Energy Market Participants." Incorporated in that policy is a 

section on "Price Manipulation or Market Abuse." This section specifically prohibits 

manipulation of prices. 

E. BP's February 2004 TET Propane Trading Strategy- Development and 

Description 1 

49. Throughout the month of January 2004, BP began building a sizable "long" 

position in physical February 2004 TET physical propane. A company is "long" if its overall 

obligation to buy and receive propane is greater than its obligation to sell and deliver propane. 

50. In the month of January 2004, Radley made several statements indicating that he 

perceived that the propane market was vulnerable to a manipulation. For example, on January 8, 

11 
2004, in an audiotaped conversation with other BP employees, Radley stated that the propane 

market was "vulnerable to a squeeze." On January 13, 2004, in a conversation with another BP 

employee, Radley stated that the propane market was "tight enough that if someone wanted to 

play games with it, potentially they could." 

51. However, during January 2004, there were also forecasts for substantial imports of 

propane, due to arrive in the Gulf Coast and at import terminals located along the East Coast to 

supplement what BP's employees identified as a "tight" market. For example, on January 28, 2004, 

BP received a published report from Commercial Services Company, Ltd. which forecasted 

approximately 3.5 million barrels of propane destined for the United States in February 2004. 

52. Throughout the month of January 2004, BP increased its position in February 2004 

TET propane. As a result, at the beginning of February 2004, BP held a significant long position in 

February 2004 TET propane. According to Summers, "Entering Feb[ruary] NAGP owned nearly 

50% of available physical propane bbls [barrels] at the TET location." Additionally, BP had a 

significant position in financial transactions which were valued based on the price of February 

2004 TET propane. Thus, coupled with its long position in physical February TET propane, BP 

had a financial interest in higher prices of February 2004 TET propane. 

53. While BP increased its position of February 2004 TET physical propane during 

the month of January 2004, the market price of February 2004 TET propane declined. 

54. On January 9, 2004, the OPIS Average price for February 2004 TET propane was 

74.5 cpg. However, by February 4, 2004, the OPIS Average price for February 2004 TET 

" 

propane had fallen to 63.5625 cpg. In light ofthe price decline, on February 3, 2004, Radley 

observed that "propane prices have been dropping like a stone." He further noted that BP was 

"hurting" because of the price decline. Similarly, on February 4, 2004, Radley sent out, viae12 
mail, a market assessment of the propane market at that time. Among other statements about the 

propane market, Radley wrote: 

Despite plenty of support from below normal temperatures in the 

key US demand centres the trade appears to have determined that 

the supply side of the ledger is adequate to see us through the 

winter. ... Although we have seen heavy selling pressure all week 

the Feb/Mar spread has held relatively firm at 6 - 6.5 cpg backward 

still reflecting the current tightness in gulf coast supplies. 

Additionally, values haven't breeched any obvious supports down 

the curve suggesting further weakness is possible .... 

[] 

Overall, US demand is good but international supply is better ... 

55. On or about February 5, 2004, the menibers ofBP's NGL Trading Bench began to 

take steps to avoid losses resulting from their position in February 2004 TET propane and, at 

Radley's direction, developed a trading strategy. Specifically, BP's trading strategy for February 

2004 TET propane was to control market prices in the February 2004 TET propane market by 

establishing a dominant and controlling position in the market. Further, Radley anticipated that 

after BP cornered the February 2004 TET propane market, BP could force those who were short 

February 2004 TET propane to buy that propane from BP at high prices dictated by BP and 

Radley. 

56. On February 5, 2004, the initial planning ofBP's manipulative scheme was 

captured in a taped conversation. In this recorded conversation, Radley called Abbott to discuss 

obtaining management approval for the execution of the February 2004 TET propane trading 

strategy. A true and accurate copy of that recording is attached hereto as Exhibit "B". In the 

recording Radley describes the benefits of executing the February 2004 TET propane trading 

strategy as follows: 

Radley: Two things I thought of. One, in terms of whether we should do 

this or not, in terms of talking to Jim [Summers], what we stand to 

gain, is not just we'd make money out of it, but we would know 

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Abbott: 

(emphasis added). 

from thereafter that we can control the market at will. If we 

never break the threshold, we'll never know what the answer is, 

you know what I mean? 

Yeah, if you go for it, you'll know okay, wait a minute this market 

is way too big and we could never ever do this. 

Their conversation then continued: 

Radley: 

Abbott: 

Radley: 

Abbott: 

The second point is, that I would imagine that the minimum 

operating level at the end of Feb. is higher than it is at the end 

of March or April because I think the wholesalers have to hold 

barrels. 

have to have something on hand, in order to pump the first day. 

That's right. 

So I think the minimum level might be a little higher than we're 

assuming based on what we experienced in April. When we 

squeezed the April May. 

Right, which was one of the reasons why it was harder to own 

all that April. That's why we had to take on a little bit more than 

we thought we had to take on, in April. And that's why I think that 

2 mm, 2.1 mm bbls as that min in Feb., I think that's real, man, I 

think that is, that's the bottom at TET. 

(emphasis added). The remark "When we squeezed the April May," refers to BP's 

attempted manipulation of the April 2003 TET propane price through an attempted 

comer of the market. The remarks concerning the "minimum operating level" refer to 

the minimum level of propane TEPPCO was believed to hold in storage to operate the 

TEPPCO system. Radley went on to describe the February 2004 TET propane trading 

strategy to Summers. Summers understood and approved BP's February 2004 TET 

propane trading strategy. 

57. According to internal BP documents, BP's February 2004 TET propane trading 

strategy developed by the BP traders was described this way: 

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In February, 2004 the NGLs trading bench entered into a strategy 

to create a long February- March spread .... The bench planned 

on holding a large portion of existing TET Mont Belvieu 

propane inventory. It was believed that the resulting lack of 

supply at TET would drive up prompt prices, further widening 

the spread. The bench would then liquidate its inventory at 

higher prompt prices before the end of the February. It was 

expected that only a small portion of inventory would be rolled 

into March resulting in a minimal loss against a substantial gain. 

(emphasis supplied). This description of the trading strategy was shared with senior BP 

management, including Byers. No one at BP questioned the accuracy of this description of the 

BP February 2004 TET propane strategy until after the Commission commenced its investigation 

into BP's activities in the February 2004 TET propane market 

58. A similar description of the strategy exists in a March 2, 2004 email sent from 

Summers to Byers, which was a few days after BP cornered the February 2004 TET propane 

market, yet failed to generate the anticipated profit from the comer. That email states as follows: 

Cameron, 

As Mark [Radley] said, it is now apparent that once the dust settles we will be 

taking a significant loss on our P&L. Let me expand a bit on what Mark said. The value 

expectation of the trade was based on building a sizeable February position, and then 

selling a portion of that position at the end of February at a premium, with the 

remaining unsold BBL's rolling into March at a loss. Of the 5 million BBL's of length 

we had in February, we expected to sell and/or cash out with the shorts, apx. 2 

million BBL's at a 25 cent gain (a conservative estimate based on the $1.00+ spread 

that was experienced this time last year), while rolling the remaining 3 million BBL's 

into March at a 6 cents loss. At the time we put the trade on, 2 million BBL' s seemed 

like a conservative estimate given what we knew (or thought we knew) about the current 

supply/demand picture and the ability of the market shorts to cover. Assuming we 

could have sold 2 million Feb BBL's, the profit on the trade would have been 

around + $20 million, with potential for upside from there. While we called the 

upward price movement correctly (the Feb-Mar spread peaked at 34 cents/gal), the 

amount of volume we were able to move was significantly less than we predicted. AUin-all, we sold around 700,000 BBL's and rolled 4.6 million BBL's into March. 

(emphasis added). Byers received and reviewed this email, but did not reply to this email. 

15 
59. Prior to executing BP's February 2004 TET propane strategy, Radley and 

Summers met with Marz to obtain approval for the execution of this trading strategy. Marz 

approved the Trading Bench's February 2004 TET propane trading strategy. Marz cautioned 

the Trading Bench to refrain from using certain words in conjunction with the February 2004 

TET trading strategy, including the word "squeeze." 

60. Radley directed BP employees Abbott, Claborn, Kienenberger and Morby to 

commence the execution ofthe February 2004 TET propane strategy on or about February 9, 

2004. BP employees followed Radley's directions and began to buy aggressively February 2004 

TET propane. Indeed, according to BP's trading records, on February 9, 2004, BP purchased 

approximately 825,000 barrels of February 2004 TET propane. Each bid, offer, transaction, 

phone call, e-mail, facsimile, communication or other act by BP employees for February 2004 

TET propane pursuant to Radley's directions was an act in furtherance ofBP's manipulation of 

the price of February 2004 TET propane by means of a "comer." 

F. BP's February 2004 TET Propane Trading Strategy- Execution, February 9 

to 13 

61. At approximately 4:45 p.m. CST, on February 9, 2004, Radley, who was not in 

the office that day and was on vacation, called Claborn to get an update regarding the execution 

of the February 2004 TET propane trading strategy. Abbott joined the conversation. A true and 

accurate copy ofthe recording of this conversation is attached as Exhibit "C." In the course of 

this conversation, Radley, Claborn, and Abbott made the following statements: 

Radley: 

Claborn: 

Radley: 

Claborn: 

What's been going on? 

How much we got on? I was just looking at that ... you wanna guess? 

3.1 

Has it been busy today? 

Oh yeah. Did it very quietly. 10 lots, 5 lots, 10 lots, 15 here, 5 here. The 

biggest lot I think I bought was 7 5. 

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Radley: 

Claborn: 

Radley: 

Claborn: 

Abbott: 

Claborn: 

Radley: 

Abbott: 

Abbott: 

Radley: 

Claborn: 

Abbott: 

Claborn: 

Radley: 

Abbott: 

Radley: 

Abbott: 

Off who? 

[Counterparty 1]. Right out of the chute we bought the 150s off 

[Counterparty 2] at 5 7/8, so we dropped that, and then it was just a bunch 

oflittle ones. Little guys. [Voicebroker 1] did 100 and, probably 150, 175 

smoothly. I mean there were no big lots, like 15 here, 10 here, 10 here, 

15 there. I did two Chalkboard deals all day. 

Where was the spread at the end of the day? 

Uh, I wanna say conservatively probably around 6 114. 

6 112, 6 114 

Something like that. Dennis is on now .... 

**** 

Did you feel good about it? 

I kinda characterize it as ... I characterize it as I was kinda surprised we 

were able to get 300 from the marketplace, basically, maybe 3-400 

from the marketplace, without moving it that much. I mean we 

definitely were moving it at the end of the day, it was definitely firming 

up at the end of the day. And it feels like the market could have been 

anywhere. Like sellers were at 65 cents or 62 cents depending on where 

the market was, right? So it's kinda, ... it seems like something that will 

just kinda move fairly easily. There's one more seller out there 

that's [Counterparty 3], I think [Counterparty 3] has one 

chunk they can do, and that's about it. 

  

I mean tomorrow, tomorrow if we are able to buy another 4-500 

thousand barrels tomorrow from the marketplace, I would be 

genuinely shocked. I mean, really shocked so ... that's it. Then I 

think ... we'll just have to play a waiting game and see, you know, how 

it's gonna shape up. 

(chuckling) It uh, still remains to be seen, doesn't it. Still need to see 

some of these shorts come in .... Were we the only buyer today? 

Pretty much 

Pretty much. 

There's a few other deals done besides us, but not many at all. 

Just a few. I'd say you could put them all on one hand that wasn't us. 

What about the surrounding news? What were the draws like over the 

weekend? 

We had 150 draw on Friday and then we had the slower draws maybe we 

only drew like 50 over the weekend. 

[unintelligible]. 

Yeah, that butane slug. Plus when you look back at the data market the 

draws always slow down on Saturday and Sunday, 'cause the truck 

liftings. The truckers go home and sleep with their women and stuff. 

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Radley: 

Claborn: 

Abbott: 

Radley: 

Abbott: 

Radley: 

Radley: 

Claborn: 

Abbott: 

Radley: 

Claborn: 

Abbott: 

Radley: 

(emphasis added). 

What about the weather outlook? 

It's still good. 

Yeah, the weather, is still cold in the Northeast. The parts ofthe Midwest 

are now just kindajust normal, normal temps is what they're forecasting, 

but the Northeast is still cold. Still below and much belows. The other 

thing, when you think about it, ... we're not going to take delivery of 

this stuff until February 29th, right, 27th, 28th. I mean, the 

shippers who are going to be required to ship, they're not going to 

feel, people aren't going to feel concerned until it's time. 

Exactly. 

I mean this could be the last week. 

That's absolutely right. There's no doubt about that. 

** ** 

At the moment, don't forget, that at the moment, even though we're 3.1 

million long, we haven't got 3.1 million in physical, yet right? 

No we got 2.4 million right now, it'll go down to 2.1 after it all priced 

from this point forward .... 

It could get pretty exciting. If we go off 3 mm long, it will be exciting. 

**** 

Good. Good. Sounds pretty good. Well something's got to give .... Half 

of me is saying look, the fact that nothing's really moved in terms of 

the spread yet is good, because people aren't looking for 

ways out ... or alternative feeds, or backing out demand, so that's 

kind of a good thing. The down side is of course, if it all happens at 

the last minute, it gets a bit messy. People start cheating, not 

delivering, and may start to look a little bit funny as well that the 

spread, you know, just erupts at the last minute. 

And we don't get the price out on all this paper. 

Well that's a different thing, if we don't get a price out on all this paper, 

The advantage of paper, is that we're selling at an index price there's 

no complaints. If we squeeze it in the last four or five days of the 

month, ahh, forgive my French, but ah, you know, it's going to be hard to 

say what's the fair price of the market at the time. 

62. In the conversation between Radley, Abbott, and Claborn, of which excerpts are 

set forth above in paragraph 61 of the Complaint, they discuss BP's execution of the February 

2004 TET propane strategy. They remark on the fact that: 

18 
a. BP purchased substantial quantities ofTET propane that day "very quietly;" 

b. BP's purchase of300,000 to 400,000 barrels of February 2004 TET propane from the 

"market" on that day moved the price of February 2004 TET propane; 

c. BP would seek to purchase another 400,000 to 500,000 barrels of February 2004 TET 

propane from the market and expected that such a purchase would place BP in a position 

of owning the entire available supply of February 2004 TET propane; 

d. BP would then have to play a "waiting game" with the shorts, waiting for the shorts to 

come to BP to purchase February 2004 TET propane from BP; 

e. by holding such a large position in TET propane, BP could "squeeze" the price of 

February TET propane in the last four to five days ofthe month, making it difficult to 

determine what constitutes a fair price; 

f. however, by "squeezing" the price, those who are "squeezed" might complain; 

g. it was "good" for BP that the spread between February TET propane and March TET 

propane had not really moved at this point in time because "people aren't looking for 

ways out," or seeking "alternative feeds, or backing out demand," i.e., it was good for 

BP because, they believed, that if the shorts in the market were unconcerned about 

covering their positions, they would remain short and eventually they would have to 

purchase February TET propane from BP; and 

h. it would be "bad" for BP if the spread between the price of February 2004 TET propane 

and the price of March 2004 TET propane widened "at the last minute," because, among 

other reasons, it would "look a little bit funny" if the "spread, you know, erupts at the 

last minute." 

63. As captured in that same tape recorded conversation described above, when 

Radley remarked "excuse my French" he was not, in fact, conversing in the French language. 

Rather, Radley's remark signifies that he recognized that he used the term "squeeze" on an 

audiotaped phone line. Accordingly, when Radley returned from vacation, he brought this 

conversation to the attention of Summers, due to his use of the word "squeeze" in describing the 

February 2004 TET propane trading strategy. 

19 
64. Summers testified under oath that he brought Radley's description ofthe February 

2004 TET propane strategy as a "squeeze" to the attention of Byers and Marz. He further 

testified that all three individuals- Summers, Byers, and Marz- reviewed the audiotape. Byers 

testified that Tim Bullock, the president ofBP NAGP at that time, also became aware of 

Radley's description ofBP's February 2004 TET propane strategy as a "squeeze." 

65. Beginning on February 9, 2004, BP, by and through its employees and pursuant to 

directions given by Radley, began purchasing aggressively February 2004 TET propane "any" 

contracts. Between the morning of February 9, 2004 and the close of business on February 13, 

2004, BP purchased over 1.4 million barrels of February 2004 TET propane. BP's position in 

February 2004 TET propane by the close of business on February 13, 2004 exceeded 3.2 million 

barrels of propane. 

66. The total TEPPCO system propane inventory fell slightly between February 9, 

2004 and February 13, 2004, decreasing from just over 3.2 million barrels on February 9, 2004 

to just over 3.1 million barrels on February 13, 2004. Therefore, as early as February 13, 2004, 

BP's position in February 2004 TET physical propane exceeded the entire TEPPCO system 

propane inventory. Radley and the Trading Bench knew that BP's position exceeded the entire 

TEPPCO system propane inventory. 

67. As BP built its long position in February 2004 TET propane, the price of 

February 2004 TET propane rose steadily between February 9, 2004 and February 13, 2004. 

G. BP's February 2004 TET Propane Trading Strategy- Execution, February 14th to 

the 20th 

68. On February 15, 2004, there was a rupture in the TEPPCO pipeline near 

Coshocton, Ohio. TEPPCO issued a press release which advised that operations of all terminals, 

including propane terminals, east of Todhunter, Ohio, with the exception of Eagle, Pennsylvania, 

20 
would be suspended until the pipeline could be repaired. Since the TEPPCO pipeline is 

unidirectional, the pipeline rupture had the effect of increasing the amount of TET propane 

available at the TEPPCO storage facility and reducing the amount of propane that could be 

delivered from the pipeline. By February 16, 2004, the total TEPPCO system inventory 

increased to just over 3.3 million barrels. 

69. In testimony, Summers acknowledged that even though at the time the pipeline 

ruptured BP's position in February 2004 TET propane was much greater than the demand 

initially anticipated by the Trading Bench, the increased supply resulting from the pipeline 

rupture compelled BP, pursuant to Radley's strategy, to increase its already substantial position. 

He stated that if: 

[BP] hadn't purchased that volume, then the short positions would be buying that volume 

from the marketplace, so we wouldn't be in a position to meet that demand ... Ifwe had 

chosen not to buy it or in fact sell our position, then the shorts could have covered a 

large portion of their positions at that time. 

(emphasis added). Because BP's February 2004 TET propane strategy was to comer the shorts, 

i.e., force them to buy February 2004 TET propane only from BP at high prices dictated by BP, 

BP had to purchase the additional supply of TET propane th,at resulted from the pipeline rupture 

to ensure that the shorts could not obtain TET propane "from the marketplace." 

70. In addition to the increased supply ofTET propane as a result of the TEPPCO 

pipeline rupture on February 15, 2004, weather forecasts around that time period indicated 

warmer weather in the Northeast United States. In fact, there was a strong warming trend in the 

Northeast United States in the last two weeks of February 2004. This had the effect of reducing 

demand for TET propane from the residential/commercial sector. 

21 
71. During this same time period, there continued to be forecasts of substantial 

imports of propane being delivered into the Gulf Coast and East Coast ofthe United States. For 

example, on February 17, 2004, BP received a published report from Commercial Services 

Company, Ltd. which forecast approximately 4.2 million barrels of propane destined for the 

United States in February 2004. This report also forecast that an additional 1.1 million barrels of 

propane would be imported into the United States in March 2004. This represented a significant 

increase in the amount of propane being imported into the United States for comparable time 

periods. 

72. On February 16, 2004, in a taped conversation, Claborn made the following 

statement describing the manner in which BP was to accumulate its dominant long position: " 

. he talked to Cameron, told him what we were doing, Cameron said just don't try to bring any 

extra attention .... " The only person with supervisory authority over the NGL Trading Bench 

that went by the name of"Cameron" at the time was Byers. 

73. BP continued its aggressive purchasing campaign of February 2004 TET propane 

between February 17, 2004 and February 20, 2004. During that week, BP- by and through its 

employees and consistent with directions given to them by Radley - purchased at least an 

additional 1.4 million "any" barrels of February 2004 TET propane. BP's position in February 

2004 TET propane increased to just under 4.7 million barrels by the close of business on 

February 20, 2004. As of that date- February 20, 2004- Byers, Marz, Summers, Radley and 

other members of the Trading Bench knew that BP's position exceeded the entire TEPPCO 

system propane inventory. 

22 
74. As BP and Radley continued to build BP's position in February 2004 TET 

propane, the price ofF ebruary 2004 TET propane increased throughout that week, although it 

dropped initially as a result of the pipeline rupture and weather forecasts. 

75. The total TEPPCO system propane inventory steadily increased between February 

17, 2004 and February 20, 2004. The total TEPPCO system propane inventory on February 17, 

2004 was just over 3.4 million barrels, and increased to just over 3.6 million barrels on February 

20, 2004. Throughout this week, BP's position in February 2004 TET propane exceeded the 

entire TEPPCO system propane inventory, sometimes by as much as 1 million barrels. Some 

TET market participants recognized BP's trading behavior. For example, in a taped conversation 

between Abbott and another market participant on February 18, 2004, the following exchange 

occurred: 

participant: Jeez what is y'all's appetite for propane? I mean, it's just like feeding an 

elephant. You guys aren't really short though, are you? You just 

got stuff pricing out? You're short pricing or what? 

Abbott: Urn, yeah, we just like it. 

participant: You dig it, huh? 

Abbott: I'd call, ... I'd call it insatiable right now. 

In another taped conversation between Claborn and another market participant, the following 

conversation took place on February 19, 2004: 

participant: Cody Hunt? 

Claborn: huh? 

participant: Cody Hunt? Is that who this is? 

Ill 

Claborn: What are you talking about, man? 

23 
participant: Someone told me you that guys were trying to corner the TET market so I 

figured you were one of the Hunt Brothers. 

Claborn: I think you are badly mistaken. Who told you that? 

participant: Huh? Ohman, that's all over the place. Come on, you've heard that .... 

76. On February 19,2004, at approximately 9:30a.m., Byers, Marz, Summers and 

Radley met in Byers's office to discuss the Trading Bench's activities with respect to February 

2004 TET propane. In that meeting, Radley informed Marz and Byers that BP's position in 

February 2004 TET propane "exceeded the availability of barrels in the marketplace at that 

time." Marz acknowledges that during that meeting they discussed the fact that BP's TET 

position on that date was around 5.1 million barrels and that the total available supply in TET 

storage was around 3 million barrels. In the course of that meeting, Byers took handwritten 

notes regarding BP's February 2004 TET propane trading strategy. Those notes read: 

• Bulk Mt. Belvue [sic] 

• People reducing inventory 

• Unregulated - OTC + Chalkboard 

• 25-35 shorts to us 

• Heavily backwardated 

Radley informed Byers and Marz that the Trading Bench could unwind the large position it had 

built in February 2004 TET propane if that was Byers's and Marz's decision. Following the 

February 19, 2004 meeting the Trading Bench did not unwind BP's February 2004 TET 

position. Rather, the Trading Bench actually increased BP's position in February 2004 TET 

propane after February 19, 2004. 

77. During the course of the February 19,2004 meeting, Byers, Marz, Summers and 

Radley also discussed the fact that the Trading Bench had exceeded a position limit imposed by 

BP policy. Specifically, the position limit was a calendar spread position limit. Pursuant to BP 

policy, the Trading Bench was required to obtain Byers' approval if the calendar spread position 

24 
limit was to be exceeded. Following the February 19, 2004 meeting, the Trading Bench 

continued to exceed their calendar spread position limit. 

78. Following the February 19, 2004 meeting, Marz met with Radley to discuss BP's 

February 2004 TETpropane trading strategy on several occasions. 

79. On February 19, 2004, Gasteam USA, a voicebroker, sent out its Daily Gasteam 

Report to, among other recipients, BP employees. That report included the following statement 

in the section identified as "NGL COMMENT": 

WITH SOME LARGE PLAYERS CONTINUING TO BUY 

FRONT- MONTH TET PROPANE IN THE HOPES OF 

PUTTING ON A SQUEEZE, FEBRUARY LEAPT FROM 68.25 

C.P.G. TO 70.00 C.P.G. ON VERY SMALL VOLUMES. 

This was one of the first of a number of published statements in industry newsletters regarding 

allegations of market manipulation ofTET propane during February 2004 which were received 

byBP employees. 

H. BP's February 2004 TET Propane Trading Strategy- Execution, February 

21st to 29th . 

80. Over the weekend of February 20 through February 22,2004, the TEPPCO 

system propane inventory continued to increase, adding as much as 450,000 barrels of propane. 

Despite this increased supply, BP's position in TET propane continued to exceed the TEPPCO 

system propane inventory. 

81. On February 23, 2004, BP- by and through its employees and pursuant to 

directions given to them by Radley - increased its long position in February 2004 TET propane. 

On that date, BP purchased February 2004 TET "any" propane at prices between 73.5 cpg and 

75.125 cpg, and sold February 2004 TET "any" propane at the OPIS average price for the 

25 
remainder of the month of February which was calculated by using each subsequent day's OPIS 

average price. These trades indicate that Radley believed that the OPIS average price for the 

remainder of the month would exceed the approximate 75 cpg that they were paying for the 

February 2004 TET "any" propane. 

82. The OPIS average price for February 2004 TET propane on February 23, 2004 

increased to 74.6875 cpg, an increase of 3.5625 cpg over the OPIS average for February 2004 

TET propane on February 20, 2004. Some TET propane market participants suspected BP was 

affecting the price of February TET propane. For example, in an instant message between two 

market participants, the following conversation occurred: 

participant A: 

participant 8: 

participant 8: 

participant A: 

participant B: 

participant A: 

participant B: 

participant A: 

participant A: 

is this just an amazing short squeeze for feb TET? last kick at the 

TET cat combined with shorts ....... or is something else miraculous 

going on? 

it's bp- trying to squeeze- but the weather is not cooperatingnot going to be like last year - and they have a huge position in a 

market that is .16-.17 backward 

tet inventories built almost 500mb from firday [sic] thry[sic] sunday ··· 

very nice! thnx 

you doing well? 

then the rascals use the hi TET numbers to try supporting pricing 

increases in Michigan and other places! 

exactly 

tell you what .......... .if they push it up over here, Exxon and 

Kinetic will jettison (even more) their own product and BP will 

have lots of product to get next year's prebuy programs off to a 

start 

a high priced start ........... they'll have to pull out the old "you 

should pay a premo price because ofBP's exceptional service and 

reliability" cards. 

26 
83. The total TEPPCO system propane inventory increased during the week of 

February 21, 2004 to February 29, 2004 by approximately one million barrels. Nonetheless, 

BP's position in February 2004 TET propane continued to exceed the entire TEPPCO system 

propane inventory during that entire week. Radley knew that BP's position exceeded the entire 

TEPPCO system propane inventory. 

84. In or about the morning of February 24, 2004, BP -by and through its employees 

who acted pursuant to directions given to them by Radley - continued to purchase aggressively 

February 2004 TET propane, buying more than 250,000 barrels at prices between 74.25 cpg and 

78.25 cpg. 

85. Due to the fact that BP was holding such a dominant and controlling position in 

February 2004 TET propane, there were few other market participants that could offer February 

2004 TET propane to market participants in significant quantities. For example, on February 24, 

2004, between 12:33 p.m. and 4:35p.m., there were no offers- other than those offers made by 

BP- to sell February 2004 TET propane in volumes greater than 10,000 barrels on Chalkboard. 

86. On February 24, 2004, after 11:00 a.m., BP employees, acting pursuant to 

directions given to them by Radley, sold over 500,000 barrels of February 2004 TET propane at 

steadily increasing prices between 79 cpg and 88.25 cpg. BP employees, acting pursuant to 

directions given to them by Radley, caused the price of February 2004 TET propane to increase 

on February 24, 2004. Radley intended to affect the price of February 2004 TET propane. 

87. The OPIS average price for February 2004 TET propane on February 24, 2004 

increased to 81.125 cpg, an increase of 6.4375 cpg over the same OPIS average price on 

February 23, 2004. The TEPPCO system propane inventory also increased on February 24, 

27 
2004. On February 24, 2004, BP's position in February 2004 TET propane exceeded the amount 

of propane in the TEPPCO system propane inventory. Radley knew that BP' s position exceeded 

the entire TEPPCO system propane inventory. 

88. On February 24, 2004, BP employees executed an internal transaction "redesignating" three million barrels of February 2004 TET propane as March 2004 TET propane 

"wet" barrels. Abbott executed this internal transaction at the direction of management, noting: 

Rolling feb[ ruary] length to WET March market. we will be carrying bbls [barrels] over 

to march [sic] 

At the time, three million barrels ofTET propane represented approximately 75% of the entire 

TEPPCO system propane inventory. Prior to this transaction, the NGL Bench had never 

executed an intra-month roll-over of one month's NGL barrels into a subsequent month. 

89. On February 24, 2004, Gasteam USA sent out its Daily Gasteam Report to, 

among other recipients, BP employees. That report included the following statement in the 

section identified as "NGL COMMENT": 

GAS LIQUIDS PRICES HAD A SLOW START, BEFORE, 

ONCE AGAIN, LEAPING HIGHER ON AGGRESSIVE 

BUYERS WHILE THE MERC SCREEN SHOWED ONLY A 

MODEST CHANGE IN ITS STANCE. THE MONT BELVIEU 

MARKET CONTINUES TO TAKE ITS PRICING DIRECTION 

FROM A FEW PLAYERS THAT ARE SQUEEZING THE 

SHORTS IN THE PROPANE MARKET. 

90. Similarly, OPIS published a newsletter on February 24, 2004 which was sent to, 

among others, BP employees. That newsletter contained the following statements: 

IN SPOT TRADING ... 

The talk in the propane markets is that one or more firms may be 

involved in a short squeeze in the TET propane market. Traders 

speculate that those firms own a hefty proportion of the inventories 

28 
in TET storage and they are making sellers pay up for the right to 

cover. 

"Somebody got to be getting killed," said one trader. "I hope it's 

nobody that owes me money." · 

Traders marveled at the fact that TET propane opened at 74cts/gal 

and ended the session at 88.25cts/gal. But, as traders said, none of 

the other propane markets seem to be touched by the rally. March 

TET barrels, in contrast, showed a 59-59.75cts/gal range of deals. 

Non-TET anys were done from 68-73.5cts/gal, with March barrels 

sold from 58.5-59.25cts/gal. 

91. On February 25, 2004, BP employees, acting pursuant to directions given to them 

by Radley, purchased aggressively February 2004 TET propane, as new sellers of February 2004 

TET propane entered the market seeking to take advantage of the higher prices BP and Radley 

caused through BP's trading activities. On February 25, 2004, BP employees, acting pursuant to 

directions given to them by Radley, purchased more than 600,000 barrels of February 2004 TET 

propane at prices between 85.25 cpg and 91.25 cpg. The OPIS average price for February 2004 

TET propane increased to 89.25 cpg on February 25, an increase of 8.125 cpg over the same 

OPIS average price on February 24, 2004. 

92. BP's position in February 2004 TET propane increased to just over 4.9 million 

barrels on February 25, 2004. The total TEPPCO system propane inventory on February 25, 

2004 increased to just over 4.1 million barrels. Radley knew that BP's position exceeded the 

entire TEPPCO system propane inventory. 

93. On February 26, 2004, BP employees, acting pursuant to directions given to them 

by Radley, continued purchasing aggressively February 2004 TET propane. Despite the fact that 

BP held an enormous position in February 2004 TET propane, on February 26, 2004, BP 

employees, acting pursuant to directions given to them by Radley, refused to sell any February 

2004 TET propane to the market. In fact, BP employees, acting pursuant to directions given to 

them by Radley, made no offers to sell February 2004 TET propane on February 26, 2004. 

29 
94. Instead, on February 26, 2004, BP employees, acting pursuant to directions given 

to them by Radley, continued to purchase February 2004 TET propane, buying over 250,000 

more barrels of February 2004 TET propane at prices between 79.5 cpg and 84 cpg. The OPIS 

average price for February 2004 TET propane decreased to 80.875 cpg on February 26, 2004, a 

decrease of 8.375 cpg lower than the same OPIS average price on February 25, 2004. 

95. On February 26, 2004, BP employees, acting pursuant to directions given to them 

by Radley, executed a second internal transaction "re-designating" 800,000 bbls of February 

2004 TET propane as March 2004 "wet" barrels. Employee Kienenberger executed this internal 

transaction at the direction of management. 

96. On February 26, 2004, the total TEPPCO system inventory increased to just over 

4.3 million barrels of propane, while BP's position in February 2004 TET propane increased to 

over 5.1 million barrels. 

97. Early Friday, February 27, 2004, BP employees, acting pursuant to directions 

given to them by Radley, continued their aggressive purchasing of February 2004 TET propane, 

buying almost 50,000 bbls before 9:00 a.m. 

98. By 10:00 a.m., February 27, 2004, BP was the primary seller of February 2004 

TET propane for any significant volume and BP employees, including Claborn, at the direction 

ofRadley began dictating the price of February 2004 TET propane to shorts who sought to 

purchase February 2004 TET propane. For example, in a taped conversation between Claborn 

and a voicebroker, the following statements were made: 

.. Voicebroker: Hey. Where's your next one? 

Claborn: Confirm, [Company A] buys 25,000 physical TET Feb. at 

.8850 

Voicebroker: Correct. ... 

Claborn: Next one is .89, .... 89. 

Voicebroker: .89? 

30 
Claborn: Yep. 

Voicebroker: [Talking on other line] .... 89. [To Claborn] Just one second. 

[On other line] You got one shot at it. [To Claborn] 

I'm telling people they got one shot. 

Claborn: That's it. 

Voicebroker: How's your day going, man? You're done by the way with 

[Company B]. 

Claborn: [Company B] buys 25,000 at .89 

Voicebroker: 89. Where's your next? 89 and a half? 

Claborn: 89 and a half. 

Voicebroker: Alright. [On other line] .89 and a half, next [to 

Claborn] ... Are you just walking them up a half step? 

Claborn: Now 

Voicebroker: For now, you are .... 

Claborn: ... yes. 

Voice broker: [on other line] ... 89 and a half is next, his next offer 

comes in a penny higher. 

This recorded conversation demonstrates that BP did not negotiate on the price of February 2004 

TET propane, rather, through the voicebroker, it dictated the price to the buyer who needed to 

cover its short position. Claborn acted pursuant to directions given to him by Radley. A true and 

correct copy of the full recording is attached hereto as Exhibit "D." 

99. By at least February 27, 2004, BP cornered the February 2004 TET propane 

market by establishing a dominant long position and dictating to the shorts the prices they had to 

pay to offset their position. During the month of February 2004, BP and Radley purchased 

February 2004 TET propane with the purpose of intentionally acquiring control or market 

dominance over the February 2004 TET propane market, and with the intent to dictate- to those 

who were short February 2004 TET propane- prices that would not otherwise have been reached 

under the normal pressures of supply and demand. By at least February 27, 2004, the price of 

February 2004 TET propane was artificial. BP employees, acting pursuant to directions given to 

them by Radley, caused the market price of February 2004 TET propane to increase, with certain 

31 
prices reaching as high as 94 cpg. The price of February 2004 TET propane also affected the 

price of the NYMEX March' propane futures contract. 

100. As a result of the execution of the February 2004 TET propane trading strategy, 

BP owned, at the end ofFebruary 2004, over 88% of all propane in the TEPPCO system. 

101. The total TEPPCO system propane inventory at the end of February 2004 

exceeded the five year average system propane inventory by approximately 65%. 

102. On February 26, 2004, Butane-Propane News, Inc. published its Weekly Propane 

Newsletter dated March 1, 2004, Volume 34, Number 9. The lead story in that newsletter was 

titled "TEPPCO Propane Trading at Significant Premium." The first two paragraphs reported: 

Last week saw a large jump in pricing for TEPPCO 

propane spots at Mont Belvieu, and even though the market 

made a sharp correction as the week progressed, it remains 

about a dime over non-TEPPCO propane. Traders tell the 

NEWSLETTER that a number of players got caught short 

and had to step in to cover their positions as trading for 

February wound down. 

Although this spike in prices was fairly well limited 

to the TEPPCO market, it did impact propane postings 

along the TEPPCO system, which spiked as much as 19 

cents and peaked over 100.00 cents/gal. for some 

wholesalers at various terminals. 

(emphasis in original). "Propane postings" refer to prices charged for propane sold to 

wholesalers at various locations. 

103. Byers, Marz and Summers were each aware of the February 2004 TET propane 

strategy prior to February 27, 2004. Specifically, each was aware that BP's February 2004 TET 

propane strategy sought to comer the February TET propane market. Byers, Marz and Summers 

met to discuss the strategy at least as early as February 19, 2004. Byers, Marz, and Summers 

learned at that meeting that BP's position in February 2004 TET propane exceeded the amount 

32 
of propane in the entire TEPPCO system. Byers, Marz and Summers each were aware that 

Radley had characterized the BP's February 2004 TET propane strategy as a "squeeze." 

Summers, Marz, and Byers approved the BP February 2004 TET propane strategy. Summers 

allowed Radley to execute the February 2004 TET propane strategy. Marz allowed Radley to 

execute the February 2004 TET propane strategy. Byers allowed Radley to execute the February 

2004 TET propane strategy. Neither Radley, nor anyone else on the Trading Bench, ever 

received instructions or guidance from BP management to refrain from cornering the February 

2004 TET propane market and executing BP's February 2004 TET propane trading strategy. 

I. BP's Subsequent Actions 

104. On March 1, 2004, the price ofTET propane fell precipitously. The OPIS 

average price on Monday, March 1, 2004 was 61.75 cpg, falling almost 25 cpg from the OPIS 

average published price on February 27, 2004. The price for March 2004 TET propane 

continued to fall for the remainder of that week. By March 10, 2004, the price of March 2004 

TET propane fell to 56.125 cpg. 

105. Certain counterparties failed to deliver TET propane to BP in satisfaction of their 

obligations. BP employees, pursuant to directions given to them by Radley, refused to accept 

late delivery, and instead dictated that each counterparty that failed to deliver TET propane pay 

94 cpg to satisfy the obligation. BP employees, pursuant to directions given to them by Radley, 

refused to negotiate on this price. 

106. While BP employees, acting pursuant to directions given to them by Radley, were 

successful in manipulating the price of February 2004 TET propane and cornering the February 

2004 TET market, they failed to make the anticipated profit because the costs associated with 

33 
acquiring the dominant and controlling position in February TET propane were greater than the 

profits they extracted from the shorts whom they cornered. 

107. In response to the unprofitable trading strategy, BP management began a nonprivileged business review ofthe February 2004 TET propane trading strategy. 

108. One of the objectives of the business review was to determine how the strategy 

could be made profitable in the future. One aspect ofBP's non-privileged business review of the 

February 2004 TET propane trading strategy involved a "peer review" of the trading strategy and 

development of a list of"lessons learned" from the trading strategy. Radley, at the direction of 

Summers and Byers, developed a powerpoint presentation and a list of items which, in Radley's 

words, would provide direction to other BP traders "if there's any applicable opportunities in 

some of the other markets .... " 

1 09. Prior to the formal peer review meeting which occurred on March 26, 2004, 

Radley sent an article from OPIS which described certain market conditions during February 

2004 to, among others, Summers, who forwarded the article to Byers and Marz. The article, 

published on March 17, 2004, was titled "FEBRUARY PROPANE RALLY PAINFUL FOR 

SOME" and the article began with the statement "When TET propane prices broke from the rest 

of the U.S. market and rallied sharply in late February, few traders were shy about pointing 

fingers at companies and uttering the words 'short squeeze.'" 

110. Among the powerpoint slides used in the peer review was a slide entitled "2004 

Position Summary v. TEPPCO Inventory v. C3 Price." A copy ofthat slide is reproduced as 

Exhibit "E," attached to this Complaint. Summers and Marz, among other BP employees 

attended the peer review. 

34 
111. Thus, according to this slide, marked as Exhibit "E", BP's position in February 

2004 TET propane exceeded all TEPPCO system propane inventory early in the month, and the 

most dramatic price increases in February 2004 TET propane occurred when BP's position was 

at its largest. This slide was reproduced in powerpoint presentations given to senior BP 

management both in the United States, including Summers, Byers and Marz, as well as BP 

management in the United Kingdom, including John Mogford and Tony Fountain. A copy of a 

draft powerpoint presentation (including this slide) entitled "Feb Lessons Leamed.ppt" which 

was sent to Byers is attached as Exhibit "F." 

112. Despite this information, as well as other information, including the information 

relayed in the February 19, 2004 meeting, the published article regarding a "short squeeze" in the 

February 2004 TET propane market, and knowledge of Radley's taped description of the 

February 2004 TET propane trading strategy as a "squeeze", neither Summers, Byers, nor Marz 

rebuked, censured or otherwise disciplined any employee on the Trading Bench for the February 

2004 TET propane trading strategy until after the Commission began its investigation. In fact, 

Summers and Byers authorized bonuses for Radley and other members ofthe Trading Bench for 

their 2004 trading activities. 

J. BP's April 2003 TET Propane Trading Strategy 

113. In April2003, BP employees, pursuant to directions given to them by Radley, 

engaged in a trading strategy similar to the BP February 2004 TET propane trading strategy. BP 

employees, pursuant to directions given to them by Radley, built a long position in April 2003 

TET propane for the purpose of attempting to comer the April 2003 TET propane market, and to 

also affect the price of April 2003 TET propane. Each bid and offer made by BP employees for 

April2003 TET propane pursuant to Radley's directions was an act in furtherance ofBP's 

35 
attempted manipulation of the price for April 2003 TET propane. Radley intended to comer the 

April 2003 TET propane market and thereby intended to affect the price of April 2003 TET 

propane. 

114. Going into the month of April 2003, BP had established a significant long 

position in April 2003 TET propane. On April 2, 2003, in a taped conversation, Abbott called 

Claborn. Radley joined the conversation, and the following statements were made: 

Abbott: 

Claborn: 

Abbott: 

Ill 

Radley: 

Ill 

Abbott: 

Ill 

Radley: 

Abbott: 

Radley: 

How does it feel taking on the whole market, man? 

Whew. It's pretty big man. 

Dude, you're the entire [expletive deleted] propane 

market. 

Don't worry about it, it's the first two days of the 

month. Plenty of lead time for people to think that 

barrels will emerge and take a short position. 

No, I mean, it's cool, 100% of the open interest in propane 

probably, and, uh 3% ofthe open interest in nat gas .... I 

dig it, it just, sometimes its hard, it just feels hard to take on 

the whole market sometimes .... 

Here's my one fear, and its a significant fear. Everybody 

waits until the last [expletive deleted] day to cover, and 

then we get wound up in a [expletive deleted] bunch of 

legal disputes. That's my fear. 

Yeah. 

That's my fear. People don't cover, don't cover, then the 

last day they either default or come to us to get them out of 

it and then we have to try and basically set a price that 

seems fair .... 

A true and correct copy of this tape is attached hereto as Exhibit "G." 

115. Despite their statements that they were "the entire propane market" and "100% of 

the open interest in propane" on April2, 2003, BP employees, acting pursuant to Radley's 

36 
instructions, continued to purchase April 2003 TET propane in significant quantities throughout 

the month of April2003. BP employees, acting pursuant to Radley's instructions, continued to 

purchase April 2003 TET propane throughout the month in an effort to comer the April 2003 

TET propane market. Radley anticipated that after BP cornered the April 2003 TET propane 

market, BP could force those who were short April 2003 TET propane to buy April 2003 TET 

propane from BP at high prices dictated by BP. 

VI. VIOLATIONS OF THE COMMODITY EXCHANGE ACT 

COUNT 1: MANIPULATION OF THE PRICE OF TET PROPANE IN FEBRUARY 

2004 

116. Paragraphs 1 through 115 are realleged and incorporated herein by reference. 

117. Sections 6(c) and 6(d) and 9(a)(2) ofthe Act, 7 U.S.C. §§ 9, 13b, and 13(a)(2), 

make it unlawful for any person to manipulate the market price of any commodity in interstate 

commerce, or for future delivery on or subject to the rules of any registered entity, including any 

contract market. 

118. Radley and other BP employees intended to affect the price of February 2004 

TET propane. Radley, in conjunction with other BP employees, possessed the ability to cause 

and did cause the price of February 2004 TET propane to be artificial on at least February 27, 

2004. Accordingly, Radley violated Sections 6(c), 6(d), and 9(a)(2) of the Act, 7 U.S.C. §§ 9, 

13b and 13(a)(2) (2002). 

119. Each and every overt action in furtherance of the intent to affect the price of 

February 2004 TET propane, coupled with that intent, including but not limited to every 

purchase, sale, bid, offer, telephone call, e-mail and instant message, is alleged herein as a 

separate and distinct violation of Sections 6(c) and 6(d) and 9(a)(2) ofthe Act, 7 U.S.C. §§ 9, 

13b, and 13(a)(2). 

37 
120. Section 2(a)(l)(B) of the Act, 7 U.S.C. § 2(a)(l)(B), provides that the act, 

omission or failure of any official, agent, or other person acting for any corporation within the 

scope of his employment shall be deemed the act of the corporation. Because Radley and others 

were employees or agents ofBP and their actions that violated Sections 6(c), 6(d), and 9(a)(2) of 

the Act were within the scope of their employment, BP is liable for those violations pursuant to 

Section 2(a)(l)(B) of the Act. 

COUNT 2: CORNERING THE MARKET IN TET PROPANE IN FEBRUARY 2004 

121. Paragraphs 1 through 115 are realleged and incorporated herein by reference. 

122. Section 9(a)(2) of the Act, 7 U.S.C. § 13(a)(2), makes it unlawful for any person 

to comer any commodity in interstate commerce, or for future delivery on or subject to the rules 

of any registered entity, including any contract market. 

123. Radley and other BP employees intended to comer the February 2004 TET 

propane market. Radley, in conjunction with other BP employees, cornered the February 2004 

TET propane market by formulating and executing BP's February 2004 TET propane strategy. 

Accordingly, Radley violated Section 9(a)(2) of the Act, 7 U.S.C. § 13(a)(2) (2002). 

124. Each and every day Radley cornered the February 2004 TET propane market is 

alleged herein as a separate and distinct violation of Section 9(a)(2) ofthe Act, 7 U.S.C. § 

13(a)(2) (2002). 

125. Section 2(a)(1)(B) of the Act, 7 U.S.C. § 2(a)(1)(B), provides that the act, 

omission or failure of any official, agent, or other person acting for any corporation within the 

scope of his employment shall be deemed the act of the corporation. Because Radley and others 

were employees or agents ofBP and their actions that violated Section 9(a)(2) of the Act were 

38 
within the scope of their employment, BP is liable for those violations pursuant to Section 

2(a)(l)(B) ofthe Act. 

COUNT 3: ATTEMPTING TO MANIPULATE THE PRICE OF TET PROPANE IN 

FEBRUARY 2004 

126. Paragraphs 1 through 115 are realleged and incorporated herein by reference. 

127. Sections 6(c) and 6(d) and 9(a)(2) ofthe Act, 7 U.S.C. §§ 9, 13b, and 13(a)(2), 

make it illegal for any person to attempt to manipulate the price of any commodity in interstate 

commerce, or for future delivery on or subject to the rules of any registered entity, including any 

contract market. 

128. Radley, Abbott, Claborn, Summers, Marz, and Byers intended to affect the price 

of February 2004 TET propane. Radley, Abbott, Claborn, Summers, Marz, and Byers engaged 

in overt actions in furtherance of their intent to affect the price of February 2004 TET propane. 

129. Each and every overt action in furtherance of the intent to affect the price of 

February 2004 TET propane, coupled with that intent, including but not limited to every 

purchase, sale, bid, offer, telephone call, e-mail and instant message, is alleged herein as a 

separate and distinct violation of Sections 6(c) and 6(d) and 9(a)(2) ofthe Act, 7 U.S.C. §§ 9, 

13b, and 13(a)(2). 

130. Section 2(a)(1)(B) of the Act, 7 U.S.C. § 2(a)(l)(B), provides that the act, 

omission or failure of any official, agent, or other person acting for any corporation within the 

scope of his employment shall be deemed the act ofthe corporation. Because Radley, Abbott, 

Claborn, Summers, Marz, and Byers were employees or agents of BP and their actions that 

violated Sections 6(c), 6(d), and 9(a)(2) of the Act were within the scope of their employment, 

BP is liable for those violations pursuant to Section 2(a)(l)(B) of the Act. 

39 
COUNT 4: ATTEMPTING TO MANIPULATE THE PRICE OF TET PROPANE IN 

APRIL2003 

131. Paragraphs 1 through 115 are realleged and incorporated herein by reference. 

132. Sections 6(c) and 6(d) and 9(a)(2) ofthe Act, 7 U.S.C. §§ 9, 13b, and 13(a)(2), 

make it illegal for any person to attempt to manipulate the price of any commodity in interstate 

commerce, or for future delivery on or subject to the rules of any registered entity, including any 

contract market. 

133. Radley and other BP employees intended to affect the price of April2003 TET 

propane. Radley caused members of the Trading Bench to engage in overt actions in furtherance 

of their intent to affect the price of April 2003 TET propane. 

134. Each and every overt action in furtherance of Radley's intent to affect the price of 

April 2003 TET propane, including but not limited to every purchase, sale, bid, offer, telephone 

call, e-mail and instant message, coupled with that intent, is alleged herein as a separate and 

distinct violation of Sections 6(c) and 6(d) and 9(a)(2) of the Act, 7 U.S.C. §§ 9, 13b, and 

13(a)(2). 

135. Section 2(a)(1)(B) of the Act, 7 U.S.C. § 2(a)(1)(B), provides that the act, 

omission or failure of any official, agent, or other person acting for any corporation within the 

scope of his employment shall be deemed the act of the corporation. Because Radley and others 

were employees or agents ofBP and their actions that violated Sections 9(c), 6(d), and 9(a)(2) of 

the Act were within the scope of their employment, BP is liable for those violations pursuant to 

Section 2(a)(1)(B) of the Act. 

VII. RELIEF REQUESTED 

WHEREFORE, the Commission respectfully requests that this Court, as authorized by Section 

6c ofthe Act, 7 U.S.C. § 13a-1, and pursuant to its own equitable powers: 

40 
08/28/2008 11:22 FAX 312 353 4324 

A. Find Defendant liable for violating Sections 6(c) and 6(d) and 9(a)(2) of the Act, 

7 U.S.C. §§ 9, 13b, and 13(a)(2) (2002); 

B. Enter an order ofpermane~t injunction restraining and enjoining Defendant and 

any of its affiliates, agents, servants, employees, successors, assigns, attorneys, and persons in 

active concert with them who receive actual notice of such order by personal service or 

otherwise, from directly or indirectly violating Sections 6(c), 6(d) and 9(a)(2) of the Act, 7 

U.S.C. §§ 9, 13b and 13(a)(2) (2002); 

C. Enter an order directing Defendant to pay civil monetary penalties, to be assessed 

by the Court, in an amount not to exceed $120,000 or triple the monetary gain to it for each 

violation of the Act, as described herein; and, 

D. Enter an order providing for such other and further remedial and ancillary relief, 

including, but not limited to restitution, disgorgement and damages to all persons affected by 

Defendant's actions, as this Court may deem necessary and appropriate; and, 

E. Enter an order requiring Defendant to pay costs and fees as permitted by 28 

U.S.C. §§ 1920 and 2412(a)(2). 

Dated: June 26_, 2006 

of Enforcement 

Joan Manley 

A TIORNEY FOR P IFF 

COMMODITY FUTURES TRADING 

COMMISSION 

41 

~ 003/004 

JUN 28 2006 13:35 312 353 4324 PAGE.03 
08/28/2008 11 • 23 FAX 312 353 4324 

JUN 28 2006 13:35 

Deputy Director, Division of Enforcement 

1155 21 51 Street, N.W. 

Washington D.C. 20581 

(202) 418- 356 

(202)4 519 (~ 

onizeski 

·or Trial Attorney, Division of 

Enforcement 

Paul Hayeck, Associate Director, Division of Enforcement 

Judy Lee, Trial Attorney, Division of Enforcement 

Christine Ryall, Senior Trial Attorney, Division of 

Enforcement 

A TIORNEYS FOR PLAINTIFF 

COMMODITY FUTURES TRADING 

COMMISSION 

1155 21 51 Street N. W. 

Washington, D.C. 20581 

(202) 418-5334 

(202) 418-5523 (facsimile) 

ATTORNEY FOR PLAINTIFF 

COMMODITY FUTURES TRADING 

COMMISSION 

525 West Monroe Street 

Suite 1100 

Chicago, Illinois 60661 

(312) 596-0714 fac~ 

~do Senior Trial Attorney 

Illinois ARDC No. 6225060 

(312) 596-0523 

sgradman@cftc.gov 

42 

@ 004/004 

312 353 4324 PAGE.04