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FTC Issues Final Petroleum Market Manipulation Rule

August 17, 2009

Michael P. A. Cohen and Mark K. Lewis

Effective November 4, the Federal Trade Commission will begin enforcing a new Petroleum Market Manipulation Rule under the Energy Independence and Security Act of 2007. The Rule states:

It shall be unlawful for any person, directly or indirectly, in connection with the purchase or sale of crude oil, gasoline, or petroleum distillates at wholesale, to:

(a) Knowingly engage in any act, practice, or course of business including the making of any untrue statement of material fact that operates or would operate as a fraud or deceit upon any person; or

(b) Intentionally fail to state a material fact that under the circumstances renders a statement made by such person misleading, provided that such omission distorts or is likely to distort market conditions for any such product.

16 C.F.R. § 317.3. Violations of the Rule are punishable by civil penalties up to $1 million per violation. Each day misconduct continues is a separate offense. 42 U.S.C. § 17304.

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