BP And Goldman Sachs Sued For Oil Fraud

[Robbien]

Source: Forbes

Dozens of small oil and gas producers across Oklahoma and the Midwest are suing Goldman Sachs, BP and ConocoPhillips, claiming the defendants conspired to defraud them out of proceeds for crude oil they delivered just before the collapse of Oklahoma-based pipeline giant Semgroup in the summer of 2008.

With this lawsuit, filed in Oklahoma district court, we're one step closer to finding out if Goldman Sachs was responsible for helping to goose oil prices to record highs in the summer of 2008 by conspiring against Semgroup in massive crude oil trades. As first detailed by Forbes Magazine a year ago in this article, Semgroup collapsed into bankruptcy under $3 billion in short sale losses on oil futures trades. Goldman, through its J. Aron commodities division, was Semgroup's largest counterparty, and appears to have been responsible for giving Semgroup its final push off the cliff by unleashing a massive margin call on Semgroup as oil prices spiked. In the process, assert plaintiffs like billionaire John Catsimatidis, Goldman's actions may have helped push up the price of oil to its record of $147 a barrel.

J. Aron and other big oil traders like BP regularly bought thousands of barrels of physical crude oil from Semgroup, which in turn bought the oil from the plaintiffs. Those plaintiffs still haven't received more than $400 million they're owed for their oil, because J. Aron and other counterparties still owed money from Semgroup refuse to pay.

Attorneys for the small oil companies believe that Goldman, which was one of Semgroup's bankers, had improperly shared information on Semgroup's trading positions with J. Aron. The allegation is similar to those leveled at Goldman in relation to the ongoing probe of its sale of complex collateralized debt obligations: that the bank was selling clients a particular trade, then taking the other side of that trade, and profiting from its clients' losses.

Read more: http://blogs.forbes.com/energysource/2010/05/18/bp-goldman-sued-oil-fraud/

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In another suit Semgroup is also suing BP and Goldman for fraud which pushed Semgroup over the edge of bankruptcy.