The U.S. Commodity Futures Trading Commission (CFTC) on Monday issued an order against Total Gas & Power North America (TGPNA) and one of its West Desk traders bringing and settling charges for attempted manipulation of natural gas monthly index settlement prices during bidweeks at four major trading hubs in Texas and elsewhere in the Southwest.
The order also finds that TGPNA and the Houston-based trader, Therese Tran (formerly Therese Nguyen), "employed a manipulative device in connection with their purchasing and/or selling large volumes of fixed-price natural gas during bid-week," CFTC said. Related charges by the Federal Energy Regulatory Commission are pending.
The CFTC order requires TGPNA and Tran jointly to pay a $3.6 million civil monetary penalty, and imposes sanctions including a two-year trading limitation on TGPNA and Tran from trading physical basis or physical fixed-price natural gas at hub locations when TGPNA also holds, prior to and during bidweek, any financial natural gas position whose value is derived in any material part from natural gas bidweek index pricing. And the order requires TGPNA to comply with various undertakings, including certain reporting and recordkeeping requirements for two years.
CFTC found that during bidweeks for September 2011, October 2011, March 2012 and April 2012, TGPNA, through Tran and other traders under Tran’s direction, attempted to manipulate monthly index settlement prices of natural gas at El Paso Permian Basin, El Paso San Juan Basin, Southern California Gas Co., and West Texas Waha through their physical fixed-price trading during bidweek.
"The order finds that the respondents were one of the largest players in the fixed-price market during these periods, with their trading accounting for a substantial percentage of the total market by volume at the relevant hubs, even though TGPNA had no material customer business, assets, or transportation at the hubs," CFTC said. "According to the order, through this fixed-price trading, respondents attempted to favorably affect the monthly index settlement prices to benefit TGPNA's related financial positions, including basis swap and index swap positions."
FERC's Office of Enforcement (OE) in September laid out similar allegations against TGPNA, Tran, and another TGPNA employee (see Daily GPI, Sept. 22). OE said the Houston-based subsidiary of France's Total SA and the two employees developed a scheme to manipulate the price of natural gas in the southwest United States between June 2009 and June 2012. TGPNA, Tran and Aaron Hall violated section 4A of the Natural Gas Act and the Federal Energy Regulatory Commission's Anti-Manipulation Rule by devising and executing a scheme to manipulate gas prices over the three-year period, FERC staff said in a Notice of Alleged Violations.
"Staff alleges that the scheme involved making largely uneconomic trades for physical natural gas during bidweek designed to move indexed market prices in a way that benefited the company's related positions," FERC staff said. "Staff also alleges that the West Desk implemented the bidweek scheme on at least 38 occasions during the period of interest."
Tran and Hall each implemented the scheme and supervised and directed other traders in implementing it, according to FERC.
FERC does not comment on ongoing investigations, which "will remain non-public throughout the investigative process," according to the agency.