Danish Power Company Reported to Police Over Insider Trading

A Danish electricity producer was reported to the police for alleged insider trading after failing to disclose a reduction in production capacity.

(Bloomberg) — A Danish electricity producer was reported to the police for alleged insider trading after failing to disclose a reduction in production capacity. 

The unidentified company bought electricity on the European intraday market at prices that would have been higher if it had followed European Union rules and first published information about its cut, the Danish Utility Regulator said in a statement on Wednesday.

When a market participant has knowledge that can have a significant impact on price formation in the market, it has a duty to publish the knowledge in question before trading on it. The regulator declined to say what particular market the case involved. 

“We have a well-founded suspicion that it didn’t happen in this case, which is why we now have reported the company to the police,” said Carsten Smidt, the head of the regulator. 

European power prices surged to a record last year, driven by the sharp reduction in gas flows from Russia and the unreliability of France’s nuclear reactors. The increasing share of intermittent renewable energy in the system has also boosted volatility to its highest ever. 

That’s made the opportunities, and the risks, for energy traders greater than ever. 

The regulator is looking into “a number of cases” of alleged insider trading due to the high volatility, Smidt told online media Finans earlier.  

Separately, the surge in prices and volatility also led to traders raking in massive amounts in bonuses for last year. Three traders at Energi Danmark Group, one of the nation’s biggest energy firms, were dismissed after refusing to forfeit bonuses worth as much as 300 million kroner ($44 million) each. 

(Updates with more context from fifth paragraph.)

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