LONDON (MarketWatch) -- Unauthorized trading in oil futures by an employee resulted in a nearly $10 million loss for brokerage PVM Oil Futures and is being blamed for a dramatic spike in futures prices earlier this week, according to news reports.
"As a result of a series of unauthorized trades, substantial volumes of futures contracts were held by PVM. When this was discovered, the positions were closed in an orderly fashion," PVM Managing Director Robin Bieber told The Wall Street Journal. The company immediately notified its clearing broker, the Financial Services Authority and the IntercontinentalExchange, he said.
Bieber told the Journal that the company had met its margin call and was conducting business "as normal." The firm is a subsidiary of independent, privately-owned oil broker PVM Oil Associates.
A broker at PVM's London office was said to have purchased between 7 million to 10 million barrels of ICE Brent crude futures early Tuesday.
Brent crude futures on the ICE exchange, as well as crude futures at the New York Mercantile Exchange, jumped more than 2% within a minute early Tuesday. The spike drove ICE Brent to an eight-month high of $73.50.
