A group of British traders known as the Essex Boys who made £570million in one day while betting on oil prices are facing scrutiny over how they pulled off their coup.
The group – many of whom are based in the upmarket Essex village of Theydon Bois – have gone on to live lives of luxury since their eye-watering payday on April 20, 2020.
Elliott Pickering is thought to be one of the group’s biggest winnings, having reportedly netted $100million or £81.5million.
He has since set up his own racing company and spends his time driving £250,000 Ferraris competing at elite events on the racing circuit.
Meanwhile, Harry Lunn, 28, went in another sporting direction and founded a new international polo team which has since flown to Argentina to compete.
Aristos Demetriou, believed to be another big winner who entered the world of trading while working in a supermarket car park, now lives in a mansion near a golf course with cars worth £167,000 outside, according to the Times.
Paul Commins, 53, is the eldest of the traders and is thought to have brought the group together to operate independently at Vega Capital London, based in Essex.
He reportedly made about £24.5million and now lives in an eight-bed mansion. He set up a commercial art gallery company with Demetriou and fellow trader Chris Roase.
But while the Essex Boys are enjoying the fruits of their labour, which earned them acclaim both in the UK and across the pond, how they made their fortune is now being scrutinised by regulators.
On April 20, 2020, the trading group made an estimated £570million the day crude oil prices went negative for the first time in the market’s history.
Vega is a small oil trading outfit in a small office next door to a couriers business, a car parts firm and a locksmiths. Mr Commins and his associates made lucrative trades on the assumption the price of oil would collapse to record lows.
Due to the pandemic, the group were marooned in their homes from the early hours of the morning.
ey were trading, on the New York Mercantile Exchange, in West Texas Intermediate (WTI) futures, the instrument most frequently used to buy and sell crude oil.
The price of crude is always settled in advance on, or about, the 20th of each month and holds good for the next four weeks.
And as it had been plummeting in tandem with the pandemic’s devastation of the global economy, all the signs were that it would end the day at a record low.
As was their right, the Essex Boys were — like dealers around the world — intent on cashing in on this unprecedented freefall.
They had agreed to buy a certain amount of oil when the price ‘settled’, as it always does, at 2.30pm each day. But as well as buying contracts for oil, they were also selling the same amount of oil.
And because they had agreed to buy at whatever the closing price was, the more it dropped into the negative, the more they were effectively ‘paid’ for their purchases.
The key to the strategy was that they sold as much as they bought, so no oil actually went anywhere.
That was how ‘Cuddles’ and his cohort pulled off their coup, which was revealed by Bloomberg in December 2020.
According to the outlet, messages revealed in the U.S. class action show them using a WhatsApp group called ‘Legends XXX’ to urge each other to ‘keep selling’.
The UK’s Financial Conduct Authority is now investigating their activities on behalf of the US Commodity Futures Trading Commission and earlier this month, a high court ordered the group to hand over information and documents about their activities.
The investigation will seek to determine whether the Essex Boys breached rules by joining forces to push down prices.
The traders have always denied any wrongdoing with their legal team insisting they were simply following ‘blaring’ market signals.
Evan Flowers, a lawyer at Dechert LLP that represents the group, told the Times: ‘Our clients brought this challenge because the manner in which the CFTC requested documents from the UK Financial Conduct Authority effectively deprived them of valuable protections under US law.
‘None of our clients did anything wrong by trading their own view of the market on April 20, 2020 and they remain confident the US regulator will come to that conclusion after reviewing the evidence.’
Smarting from the loss of $92,000 (£68,000) on the day oil prices plunged below zero, a California-based coin-dealing company has filed a lawsuit against Vega Capital London Ltd, the minnow company through which Commins and his colleagues were affiliated.
It accuses them of making their fortune by manipulating the market to their advantage. As this is a so-called ‘class action’, the complainants can represent other parties who might allege a similar grievance.
Since their huge victory, the Essex Boys have each gone in their own direction.
Mr Commins earned the nickname ‘Cuddles’ during his time as a boss at the International Petroleum Exchange [IPE].
He is described as having a Cockney accent from a Guy Ritchie movie and was lampooned so much by colleagues because he pronounces ‘three’ as ‘fwee’.
He lives in a large detached mansion in Essex where he has a Range Rover with personalised number plates.
Recently valued at £3.65 million, the three-storey pile in an affluent Essex village has a swimming pool, home gym and walk-in wardrobe.
The father of three acquired these totems before he waltzed away with £22.5 million — his comparatively modest share of the Vega oil-trade spoils.
Also in the drive of the luxury property shortly after the story broke were a 2020-registered Porsche and another new Range Rover.
Commins’ son George, 19 at the time, raked in an estimated £6.5million.
Another major winner from that fateful day was Chris ‘Dog’ Roase, 48, who made an estimated £73.3million.
He is believed to live in a listed mansion which features a tennis court, five-aside football pitch and a pool house, according to the Times.
Novice Connor Younger, the son of a tiler, also made a reported sum of £81.5million by today’s exchange rates, and was aged just 20 at the time.
The most well known of the group is James Biagioni, 35, who was once voted ‘the City’s most eligible bachelor’ by Square Mile magazine in 2015.
The Times reports that other individuals who applied to the High Court are Paul Sutton, 39, Matthew Thompson, 28, and Nicholas Stewart.
A source told the Times the traders are considering whether to appeal the court ruling ordering them to hand over documents and information.
They traders operate independently through Vega Capital, which is not accused of any wrongdoing.