Danish police arrested eight employees at an energy trading company who will face charges of manipulating prices on the Nordic electricity exchange. This is the first known arrest for breaches of REMIT, with other cases resulting in fines. They risk up to 6 years in prison.
When as many as eight people are arrested for market manipulation, it indicates an poor compliance culture throughout the company.
Danish police said they have apprehended three directors and five traders of an energy trading company that trades electricity on NordPool exchange and charged them with market manipulation. The company is believed to have earned illegal profits of 100 million Danish crowns (€ 13.2 million) or more, police said in a statement.
The apprehended individuals work for a company in the city of Aarhus, trading electricity on the Nordic market. The police have raided several addresses and have seized ten properties belonging to six of the eight accused.
These are houses and apartments in North Zealand, Thy, the Aarhus area as well as Central and Eastern Jutland and a small piece of forest in Jutland.
The eight employees of the Danish power trading company will be held in police custody for the next four weeks while suspicion of market manipulation is investigated, a court in the city of Aarhus ruled. All eight suspects had pleaded not guilty .
Denmark’s national police unit for special crime said the group had been charged, but did not name them or the company they worked for. The court later issued a gag order prohibiting media from identifying the suspects.
During the constitutional inquiry at the Aarhus district court it became clear that the police suspects that the accused has obtained illegal profits for a three-digit million amount by having placed trade orders and carried out transactions that gave “misleading signals” to the energy market about demand and prices for energy prices from March 2021 to March 2023.
According to the police, this was done, among other things, by buying electricity in one bidding zone at an artificially low price, while the same electricity was sold in another bidding zone, where the price was artificially high.
The penalty for this offence is up to six years in prison. Five of the defendants lodged appeals of the custody decision, while the remaining three have asked for time to reflect
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What action to take?
All the above is a clear indication that enforcement of possible market manipulation under REMIT enters a new era, now even individuals can be sent to prison as a sanction.
Highlighting the necessity for every company that is actively trading in the energy markets to review its Compliance framework, implement a dawn raid manual and have an action plan at hand of how to handle arrests of employees in relation to their trading activities.
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