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CFTC Fines Six Energy Trading Firms $50M for Reporting Fake Gas Trade Data

CFTC Fines Six Energy Trading Firms $50M for Reporting Fake Gas Trade Data

The Commodity Futures Trading Commission (CFTC) said Wednesday it reached settlements totaling $50 million with six energy trading companies resolving charges that they falsely reported information on natural gas trades to index publishers. Two of the firms also were charged with attempted manipulation of price indexes.

Aquila Inc. affiliate Aquila Merchant Services and Xcel Energy Inc. affiliate e prime Inc. agreed to pay $26.5 million and $16 million, respectively, to settle charges of false reporting and attempted manipulation of natural gas prices.

Four companies entered into settlements with the CFTC on charges of false price reporting only: Entergy Koch LP affiliate Entergy Koch Trading LP, ONEOK Inc. and affiliate ONEOK Energy Marketing and Trading Co. LP each agreed to pay $3 million, and Calpine Corp. affiliate Calpine Energy Services LP will pay $1.5 million to resolve the charges.

"With today's aggregate $50 million in settlements, the Enforcement Division is bringing to a close a number of the energy company investigations it commenced in mid-2002," said CFTC Director of Enforcement Gregory Mocek. "Almost all of these companies decided to cooperate and pay penalties for their alleged misconduct."

These latest settlements bring the total penalties collected by CFTC from energy companies so far to approximately $180 million.

None of the settling parties admitted or denied the charges in the settlements, according to the CFTC. In addition to the penalties, the energy companies have been ordered to cease and desist from further violations, and are required to cooperate with the federal agency in the future.

The majority of the price-reporting violations began as early as January 1999 and extended through October 2002, according to the CFTC settlements. The trading companies were found to have submitted data on nonexistent gas trades to index publishers, and/or altered price and volume information on actual trades to skew the indexes to their benefit. If successful, the conduct of some of the companies could have influenced the prices for Nymex gas futures contracts, the CFTC said.

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