By Tom Doggett WASHINGTON, Nov 3 (Reuters) - A U.S. Federal Trade Commission rule takes effect on Wednesday that will hit energy traders and companies with fines of up to $1 million a day if they manipulate the oil markets. The FTC unveiled the rule back in August to go after fraud in oil markets that it said could cause widespread damage to the U.S. economy. The old fine was just $11,000. "This new rule will allow us to crack down on fraud and manipulation that can drive up prices at the pump," FTC Chairman Jon Leibowitz said at the time. "We will police the oil markets -- and if we find companies that are manipulating the markets, we will go after them." The rule prohibits fraud or deceit both in the cash, or physical, energy markets and on the regulated futures exchanges. Violations include making false announcements of pricing or petroleum output, false data, and so-called "wash sales" where it appears there has been a sale or purchase of a commodity even though no ownership change has taken place. Gerry Alexis, an antitrust attorney with the Perkins Coie law firm in Washington, said the rule may force oil companies to think twice about revealing their cash oil transactions to price reporting companies like Platts. "That could of course be an unintended consequence of the rule," she said. "There will be less price transparency and somebody could have an even greater impact if they get in and report prices that are not correct." Under the rule, the FTC will go after wrongdoers in the wholesale market and not at the retail level. For example, the agency said it would not pursue charges against a retail service station owner that raised gasoline prices after a hurricane. However, the FTC says it could fine the company selling the gasoline to the service station if the company claimed it boosted prices because of low fuel inventories when it actually had plenty of supplies on hand. In addition to looking for fraudulent activity in the cash market, the FTC says it will coordinate with the Commodity Futures Trading Commision on manipulation in the regulated futures markets. However, the FTC would not rule out acting alone in charging traders in the futures markets with manipulation if the CFTC decided not to pursue possible wrongdoing. (Reporting by Tom Doggett; editing by Jim Marshall)
