Case Dismissed Against Zuckerman Spaeder LLP Client in United States v. Mark Radley, et al.
On September 17, a U.S. District Court in Houston, TX dismissed a 26-count indictment charging defendants in United States v. Mark Radley, et al. with offenses involving an alleged conspiracy by former traders and employees of a subsidiary of BP America, Inc. (BP) to manipulate and corner the market for over-the-counter propane trading during February 2004. Zuckerman Spaeder LLP partners Roger E. Zuckerman and Gregg Bernstein (along with Houston attorney J.C. Nickens) represented one of the defendants, James Summers, the former vice president of BP’s natural gas liquids trading bench and the highest-ranking employee to have been charged in the indictment.
“This is an important decision regarding a statute seldom used for its criminal sanctions,” said Mr. Zuckerman. “The markets concerned in this case are exempt from prosecution under the law used by the prosecution and we are pleased that the court agreed, vindicating our client.”
The indictment alleged that defendants sought to corner and manipulate the propane market by buying up large contracts for the future delivery of propane and then selling the contracts at the end of the month to other buyers who needed propane to meet their contractual obligations to other purchasers. Defendants were charged under the Commodity and Exchange Act (CEA), and the Wire Fraud and Conspiracy statutes.
After first succeeding in their venue motion to move the case from the District Court in Chicago to Houston, Zuckerman Spaeder attorneys moved to dismiss the indictment, arguing that their client’s conduct was exempt from prosecution under an exception to the CEA, which excludes prosecution for alleged manipulative trading in these types of markets. Zuckerman Spaeder also argued that the CEA was void as applied to these facts because the terms “manipulation” and “corner” do not have any clear meaning, and the government was seeking to criminalize what was nothing more than normal trading behavior in the market. The court agreed, adopting all of the defendants’ arguments.
This was only the second prosecution attempted by the government in the more than 70-year history of the CEA. Zuckerman Spaeder is the only firm to be involved in both cases. In the first, United States v. Reliant Energy Services, Zuckerman Spaeder partner Steven Salky successfully represented one of the defendants accused of attempting to manipulate the price of electricity in the California energy market by misrepresenting the availability of certain power plants for power generation. Shortly before trial, Mr. Salky’s client agreed to the terms of a deferred prosecution agreement and the indictment was dismissed as to his client and all of the other defendants.