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Trading activity on one Canadian heavy crude contract dropped significantly in mid-April when most brokers at Calgary-based NE2 Group resigned, and the firm is now being sued for alleged workplace harassment and bullying, Bloomberg reported on Thursday, citing sources with knowledge of the issue.
NE2 Group's trading activities have played a key role in the price-setting used to determine the benchmark prices of several crude grades from Canada as the firm handled enough volume of futures trades. After a mass exodus of employees around Easter weekend, when an estimated two-thirds of the company's brokers resigned, the number of open interest on Western Canadian Select (WCS) on CME Group slumped from around 10,000 contracts in the middle of April to around 7,000 contracts in early May and to 6,000 contracts on May 17, according to data compiled by Bloomberg.
After the resignations, traders were concerned that NE2 Group would not have the staff to ensure accurate prices. Some of those traders exited at least one CME contract, they told Bloomberg.
The resignations took place more or less around the time when the firm was paying out annual bonuses after a very profitable year, Bloomberg's sources said.
The reasons for the resignations are generally the same as the allegations that Mark Bennett, NE2's former vice-president of North American energy, details in a lawsuit against the firm. The lawsuit alleges that president and owner Timothy Gunn bullied staff and physically and verbally abused employees and clients.
Bennett, who declined to comment for Bloomberg, says he was wrongfully dismissed in February after raising concerns about the "toxic work environment" and "unilateral changes to employee compensation."
"As we explore the allegations made in this claim, we expect additional facts will be revealed. NE2 will openly and transparently address these allegations through the Court process," the company said in a statement carried by Bloomberg.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com