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Ever since OW Bunker announced on October 7 that it would be posting an unrealized accounting loss for the third quarter of 2014 as a result of the effect of sliding oil prices on its risk management policy, questions have been asked about how the company was being run.

Exactly one month later, OW Bunker filed for bankruptcy having two days earlier announced a loss of "around $150 million" from its risk management activities, an alleged "fraud" committed by senior employees at its Singapore-based subsidiary Dynamic Oil Trading and the sacking of Head of Risk Management, Jane Dahl Christensen.

Since the bankruptcy was announced, a former risk manager, Kenneth Rosenmeyer, has been quoted as saying that he had a target to make monthly profits of $1.5 million for the firm via "pure speculation" and that this was how he had made $27 million in 2013 - 32.3 percent of OW Bunker's $83.5 million profit. Rosenmeyer ended up leaving OW Bunker in March after 13 years, just days before the initial public offering (IPO), stating that the IPO would have made it harder for him to maintain the good results.

Meanwhile, OW Bunker's chief executive officer (CEO), Jim Pedersen, is reported to have accused three employees at Dynamic Oil Trading (Singapore) Pte Ltd of giving a credit of $80 million to Tankoil Marine Services Pte Ltd without reporting it.

Whilst shareholders and market analysts continue to examine past events and try to determine who is to blame for the OW Bunker collapse, today Bunker Index takes a look at another question: how much warning was given to shareholders in the IPO prospectus about the risk of investing in OW Bunker?

The short answer to the question is: a lot. In fact, the prospectus dedicates a whole section to 'Risk Factors' with the subsections 'Risks Relating to Our Industry and Business', 'Risks Relating to Our Risk Management, Financial Condition and Financing', 'Risks Relating to Regulation' and 'Risks Relating to the Offering'. In total, over 16 pages are written solely about the issue of risk.

Given how events have unfolded over the past few weeks, perhaps there are two key comments from the disclosure requirements (Section D). They are:

"We are exposed to various risks in connection with our use of derivatives, which, if not properly managed, could have a material adverse effect on our business, financial condition and results of operations."

"Fraudulent behaviour by our employees and/or third parties could have a material adverse effect on our business, financial condition and results of operations, including as a result of criminal, civil and employment sanctions as well as negative publicity."

The full list of risk warnings from this section of the prospectus has been provided below.

Source: OW Bunker IPO prospectus, March 18, 2014.

An investment in equity securities such as the Offer Shares involves a high degree of financial risk. There are risks associated with an investment in the Offer Shares including risks relating to our business and industry, which you should consider carefully before you decide to buy any Offer Shares, including:

• we face competitive pressures and if we are not able to effectively compete in our markets, our profits may decline;

• economic, political and other risks associated with international sales and operations could adversely affect our business, financial condition and results of operations;

• we may not be successful in expanding our operations consistent with our strategy;

• our vessel operations, including marine fuel transportation, subject us to inherent risks that, if materialised, could have a material adverse effect on our business, financial condition and results of operations;

• if a third party fails to provide services to us or our customers, it could have a material adverse effect on our business, financial condition and results of operations;

• if the marine fuel or marine fuel components we purchase from our suppliers fail to meet the contractual quality specifications we have agreed to supply to our customers, it could have a material adverse effect on our business, financial condition and results of operations;

• material disruptions in the availability or supply of fuel would have a material adverse effect on our business, financial condition and results of operations;

• due to our operations around the world, we are subject to various changing economic, political and governmental conditions as well as terrorist attacks, piracy and international hostilities, which have previously affected the marine logistics and shipping industry, and any future changes affecting our operations, attacks or incidents could negatively affect our business, financial condition and results of operations;

• we may not be able to maintain insurance coverage at our current levels or at all;

• if we are unable to retain our senior management and key personnel or to attract new qualified personnel, it could have a material adverse effect on our business, financial condition and results of operations;

• information technology failures and data security breaches could have a material adverse effect on our business, financial condition and results of operations;

• litigation could have a material adverse effect on our business, financial condition and results of operations;

• global economic development and the level of international trade are critical factors affecting the demand for marine fuel, and a decline in international trade could adversely affect our business, financial condition and results of operations;

• significant changes in the market price of marine fuel that are not hedged or passed through to our customers could have a material adverse effect on our business, financial condition and results of operations;

• we are exposed to various risks in connection with our use of derivatives, which, if not properly managed, could have a material adverse effect on our business, financial condition and results of operations;

• we extend trade credit to most of our customers in connection with their purchases of marine fuel from us, and our business, financial condition and results of operations could be materially adversely affected if we are unable to collect trade receivables from our customers or to successfully claim such amounts pursuant to our credit insurance policy, if applicable;

• certain of our contracts with customers, suppliers and financial institutions expose us to heightened counterparty risk, which could have a material adverse effect on our business, financial condition and results of operations;

• our business is dependent on our ability to obtain financing to meet our working capital requirements and fund our future growth;

• significant fluctuations in foreign exchange rates could materially affect our results of operations;

• changes in emissions control laws and regulations applicable to our operations could have a material adverse effect on our business, financial condition and results of operations;

• if we violate sanctions imposed by the United States, the EU, the United Nations or others, it could have a material adverse effect on our business, financial condition and results of operations;

• fraudulent behaviour by our employees and/or third parties could have a material adverse effect on our business, financial condition and results of operations, including as a result of criminal, civil and employment sanctions as well as negative publicity;

• changes in Danish or foreign direct or indirect tax laws or compliance requirements, or the practical interpretation and administration thereof, could have a material adverse effect on our business, financial condition and results of operations;

• in countries where we have established physical distribution operations, we generally need licences to supply marine fuel and we may be prevented from supplying marine fuel with our physical distribution operations in these ports and areas if we do not maintain such licences;

• changes in derivatives legislation and rulemaking could have a material adverse effect on our business, financial condition and results of operations; and

• under U.S. Foreign Account Tax Compliance Act, certain payments made by the Company on or after 1 January 2017 may be subject to a 30% federal withholding tax unless certain requirements are met.

In addition to risks relating to our business and industry, there are risks relating to the Offer Shares, which you should consider carefully before you decide to buy any Offer Shares, including:

• following the Offering, the Major Shareholder will continue to be a major shareholder and may control or otherwise influence important actions we take in a way that may not be aligned with the interests of the Company’s minority shareholders;

• the Shares have not previously been publicly traded, and their price may be volatile and fluctuate significantly in response to various factors;

• future sales of Shares after the Offering may cause a decline in the market price of the Shares;

• differences in exchange rates may materially adversely affect the value of shareholdings or dividends paid;

• U.S. and other non-Danish holders of Shares may not be able to exercise pre-emptive rights or participate in any future rights offers; and

• investors’ rights as shareholders will be governed by Danish law and differ in some respects from the rights of shareholders under the laws of other countries.