Police File Criminal Charge Against Yara International

The world’s lagest fertilizer producer, Yara International, is charged with violation of the Norwegian penal code paragraph 276a, cf paragraph 276b, according to a market statement. The Norwegian company is accused of paying  USD millions US in bribe to Libyan and Indian officials in the period between 2006 and 2008. Stocks drop 4% at Oslo Stock Exchange.

“Regardless of what Økokrim conclude, these charges are very serious for Yara.”

Jørgen Ole Haslestad

The Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (“Økokrim”) has launched charges against Yara International ASA.

On 8 April Yara initiated an external investigation and at the same time
notified Økokrim of the possibility that criminal offenses may have occurred before October 2008, in connection with the negotiations preceding the company’s investment in Libya.

In connection with the ongoing investigation process, a Yara employee has brought forward information relating to a separate matter, and Yara has approached Økokrim with this information.

The information relates to a project in India during the period 2006-2007.

The project aimed to establish a joint venture for the production and sale of fertilizer, but was not realized.

An initial investigation has uncovered a payment of USD 1 million to a third-party.

Based on this information Økokrim has launched an investigation.

“Regardless of what Økokrim conclude, these charges are very serious for Yara. We are cooperating with Økokrim and await the results of the investigation. I am satisfied that the investigation we have initiated has brought this matter to the surface, but disappointed that the information did not come at an earlier stage if it emerges that Yara has committed an offense,” Jørgen Ole Haslestad, President and CEO of Yara International ASA writes in the statement.

Yara International ASA is the world’s leading chemical company that converts energy, natural minerals and nitrogen from the air into essential products for farmers and industrial customers.

International has a  global workforce of 7.300 employees.

At the Oslo Stock Exchange the Yara – YAR – share price drop more than  4% after the news about the criminal charges.

Copy of statement.

District Attorney Marianne Djupesland with  The Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime  says, according to the website DN.no, that they on Wednesday executed a search warrant against the company, and then decided to file official charges against the company.

“The company has approached the Norwegian authorities, and that we see as praiseworthy. The management wants to cooperate,” she says.

The investigation will be of high priority, according to the District Attorney.

 “We’re talking about a large international company, with headquartered in Norway and the Norwegian state as a large shareholder. This is a prioritized investigate for us,”  Ms. Djupesland says.

It is the company Yara that is charged, no individuals. That means that a fine is the only possible punishment.

“It’s hard to say how this might end. But corruption has a serious penalties for individuals of up to ten years, that says something about the seriousness of a case like this,” the District Attorney points out.

She will not comment on whether it is appropriate to target individuals as well.

Related by the Econotwist’:

• YARA International To Investigate Libyan Relations
• Yara Gives Up On Terra Merger
• Terra-Yara Deal In Jeopardy
• Analysts Lost In (Norwegian) Woods

Related articles:

• Fluoride :- Who Supplies Your Poison? (angelbabe43.wordpress.com)
• CITI: The Demand For Fertilizer Is Still Fantastic As Farmers Take Advantage Of Surging Crop Prices (businessinsider.com)
• BASF Said to Hold Talks With Potential Fertilizer Unit Bidders (businessweek.com)
• Se’RA’fana Speaks – Compassion Crystal Skull (crystallinematrix.wordpress.com)

DnB NOR Markets: Weekly FX Update & Stock Recommendations

Increased focus on bank losses and more turmoil surrounding the future of the euro, are amongst the things that will influence the forex market the coming week, Norwegian brokerage firm DnB NOR Markets writes in their weekly FX update. Here’s also DnB NOR’s weekly recommendations of stocks listed at the Oslo Stock Exchange.

“The euro seems vulnerable.”

DnB NOR Markets

“We now expect new QE measures from FED, and hence expect USD to remain at today’s levels short term. Longer term we are still USD positive. We are still bearish on the euro going forward, as fiscal tightening is expected to weigh down on growth,” analysts Camilla Viland and Maren Romstad writes.

 

Camilla Viland

 

Adding: “NOK TWI is still relatively strong. We are more or less neutral regarding NOK going forward, but due to euro weakness EURNOK is expected to trade lower going forward.”

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In this weeks analysis DnB NOR Markets takes a closer look at the GBP.

Ms. Viland and Ms. Romstad belive in a stronger British Pound.

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Maren Romstad

 

“Developments in key figures and growth in particular has been a hot topic in markets lately.”

• British GDP grew by 4.9 % q/q s.a.yr in Q2.
• However, several indicators points towards weaker growth going forward.
• Still, we believe in stronger growth than in the euro area.
• And our estimates for British growth are perceived as somewhat more positive than consensus’ view, while we seem to be more negative than consensus regarding European growth.
• Our view on relative growth, thus indicate a stronger GBP going forward.

Here’s a copy of the full analysis.

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Equities; New Recommendations

DnB NOR Markets published Monday the following BUY-recommends of shares listed at the Oslo Stock Exchange:

• • Algeta
  • Sparebanken Nord-Norge
  • Telenor
  • Statoil
  • Aker Solutions
  • Orkla
  • RCL
  • BWG Homes
  • BWG Offshore
  • Fred. Olsen Energy

Here’s the full analysis (Norwegian only).

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In Defence Of A Robot

This must be one of the weirdest lawsuit we have seen in long time: Starting this week, the two Norwegian day traders who are charged with fraud and violation against an automatic trading robot will appear in Oslo District Court to defend their actions. However, the poor robot,  being called a stupid, cheating liar, have the best representatives any offended robot can have; a hard-hitting police attorney, backed by an army of experts from the Oslo Stock Exchange. The robots owner, Timber Hill, has not been seen, nor heard from since the news story broke in August this year.

“Either the robot is very, very stupid, or the person who programmed the robot is very, very stupid.”

Sven-Egil Larsen

The case against the two traders in the so-called “robot-case,” where alleged manipulation of a the stock market trading machine is essential, started Monday. The Norwegian police believe that the day traders,  Sven-Egil Larsen and Peder Veiby, has conducted a number of unlawful acts against the brokerage firm Timber Hill and its stock trading robot, and have charged them on grounds of market manipulation.

“This case should never have come up before the court. It is the Oslo Stock Exchange who has initiated proceedings against the accused and the court will lead the crusade. None of the authorities that have looked at the case, neither the Financial Authority or the police, seems to be able to look at it with competent and critical eyes. For this reason, we now have a case that hardly anyone in the market can understand,” says Mr. Larsen’s lawyer, Halldor Christen Tjoflaat, according to the website Stocklink.no.

“Timber Hill appeared in 2008 as a poor investor in selected papers and on selected days. Rather than do something about the obviously poor investor who moved prices randomly when there only was a small trade in  papers they were active in, the Oslo Stock Exchange have turned against them who has a different trading strategy than Timber Hill and made money off it,” he adds.

The two Norwegians are accused of price manipulation of shares listed at the Oslo Stock Exchange, during the period November 2007 to March 2008.

Oslo Stock Exchange is in a strategic alliance with London Stock Exchange where Timber Hill is a member.

Price Manipulation

According to the charges, the day traders placed over 2,200 orders, and managed to give the market a false picture of supply and demand.

Christian Stenberg

“We believe the two are guilty of a numerous cases of price manipulation. They have added buy and sell orders that was not real, they have had another motive; namely to move the price,” prosecutor Chris Stenberg of the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (Økokrim) told the newspaper Dagens Næringsliv, when the lawsuit was filed.

“It’s not about fooling anyone, but to be smarter than someone,” one of the traders says.

Sven-Egil Larsen and Peder Veiby was among the most active equity traders on the Oslo Stock Exchange in 2007 and 2008.

According to the allegations, they manged to make a pre-programmed trading robot at the brokerage firm Timber Hill offer better prices than it was supposed to do.

Stupid Robot

Both Mr. Larsen and Mr. Veiby deny any accusations of any wrongdoings, and believe that they only found a weakness in a system.

They emphasize that non other than the electronic player has been harmed.

They admit, however, that they have exploited the weakness, but denies the accusation of  manipulating the market.

Larsen believes that either the robot is very, very stupid, “or the person who programmed the robot is very, very stupid,” he says.

Larsen was the one that first found the weakness in the Timber Hill system when he was doing arbitrage trading in low liquidity stocks at OSE. Peder Veiby was long in Hafslund and had followed the stock over a longer period. This made Mr. Veiby able to form a picture of automated systems trade patterns over time and found that Timber Hill had its special way of behavior. He observed how the Timber Hill system changed the level of price and orders,  and decided to try to make money on this behavior.

It all began in November 2007 and lasted until March 2008.

Mr. Veiby considers it likely that he would have made money on the deals.

Both traders purchased a large chunk of stocks at a specific  price, followed by series of smaller purchases at a higher price. All within a short periode of time.

The Timber Hill robot reacted by raising the price on the shares, and Larsen and Veiby did what every skilled trader would do; they dumped their holdings and secured the profit.

They also did the same exercise by shorting shares, but then making the profit by selling to the ever lower price.

According to the two traders statement in court, it was not every time the strategy succeed.

Occasionally, the robot did not react as they had anticipated, usually caused by other players preventing the trade pattern to repeat itself, they explained in court.

200 Trades A Day

In their statement they also says that they was surprised every time it was possible to get the robot to repeat the same pattern.

Sven-Egil Larsen

Veiby is charged with 42 cases of violations of the Securities Act’s, while Larsen is charged with 30, involving a total of 2.200 transactions.Larsen estimates that during 2008, he made about 20.000 trades, which indicates between 100 and 150 trades per day, on average.

Veiby estimates that he performed about 60 to 70 trades per day during the period.

Asked by the judge, Larsen and Veiby said that they did not knew each other before this case, and that they had not been cooperating.

On the contrary, they had by several occasions destroyed each other’s plans.

Quote Stuffing

Police attorney Christian Stenberg will only make general comments, and not go into details.

He believes the two defendants placed orders with the purpose of moving the price, and since the market relates to the quotes provided by the exchange (the robot) it would be a form of manipulation.

The District Court in Oslo has to the decide on the rather interesting question whether this is illegal, or not.

“The question is whether the orders that was entered is legitimate. That’s for the court to decide,” the police attorney says.

No Sign Of The Robot Owner

During questioning, the police was interested to know what would be a “natural behavior,” and what perception the two traders had of the Timber Hill trading platform.

However,  the public prosecutor did not offer any explanation as to why representatives of the Timber Hill was not summoned as a witness.

Peder Veiby’s lawyer, Anders Brosveet, said in his procedure that it was not the two defendants who moved prices,  and claimed it was Timber Hill since they deleted their own orders and then raised the price.

The problem is that the brokerage firm’s robot was so poorly programmed that it failed to pick up signals that any rational market participant would do, he argued.

We might expect a ruling by the court at the end of the week.

Related by The Swapper:

Update: Day Traders Crack The Timber Hill Trading System

Oslo Stock Exchange Comments On Market Manipulation

Illegal To Outsmart A Trading Robot, Expert Says

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