Oil futures drunk-trading incident

In the early morning of 30 June 2009, Steven Perkins, an employee of London-based PVM Oil Futures, traded of oil – worth approximately US$520 million (£340 million) – while drunk. These unauthorised trades caused the price of Brent Crude oil to rise by over $1.50 a barrel within a short period of time, a trend generally associated with major geopolitical events, before dropping rapidly. As a result of the trading, PVM Oil Futures suffered losses of almost $10 million and Perkins was dismissed, later being banned from trading by the Financial Services Authority (FSA).

Background Steven Perkins, an employee of PVM Oil Futures since 1998, was a Brent Crude broker in the London-based company's international commodities futures division. and ten times the average trade volume. He made his last trade at 3:41 a.m., approximately two and a half hours later.

Perkins sent a text message to his boss stating that he was feeling ill at approximately 6:30 a.m. He was later contacted at 7:45 a.m. by an administrative clerk at PVM, who enquired about the early-morning trades. Perkins replied that he had spent the night assisting a client with trading. However, by 10:00 a.m. his claim had been disproved and PVM attempted to rid themselves of the futures. per barrel, the highest in eight months,

Iain Gilligan, the Head of Compliance at PVM, had no previous experience of trading or broking in any financial or commodity markets, having joined PVM directly from the Army a few years previously. He disregarded the importance of the compliance function, which had been underlined by the 2008 financial crisis. As Head of Compliance Gilligan was responsible for implementing and rigorously monitoring effective control systems to ensure trades were correctly matched, allocated and verified in a timely manner. His failure to set in place appropriate internal controls resulted in the whole series of trades remaining unquestioned and unverified for many hours.

After an investigation by the FSA, which deemed Perkins "not fit and proper", he was barred from working as a trader in June 2010 for a minimum of five years and fined a total of £72,000 – paid in 36 installments – which was reduced from £150,000 after Perkins expressed concern that the large fine would cause him undue financial hardship.