Following FERC queries as to the role in their organizations of two former traders who pleaded guilty in 2006 to attempted natural gas price manipulation while employed by other marketing companies, Vista Energy Trading LP (VET) has withdrawn its FERC application for market-based rate authority while Vista Energy Marketing LP (VEM) has structured its operations to conform to a consent order restricting the market activity of the traders (see Daily GPI, March 2).
In a filing at the Federal Energy Regulatory Commission last week [ER09-553, ER09-614], Vista Energy Marketing acknowledged that the terms of a consent order with the U.S. Attorney's Office for the Northern District of Georgia permanently bar Michael Whalen, a former Cinergy trader, and Paul Atha, a one-time trader with Mirant, from engaging in any activity requiring Commodity Futures Trading Commission registration or from acting as a principal in any entity that engaged in such activity.
To avoid the problem, VEM set up a Texas limited partnership designed to provide it with the ability to operate as a pooled investment vehicle and as such, VEM and its upstream general partner, Irish Marketing LLC, would be exempt from registration as "commodity pool operators" or as "commodity trading advisors." Whalen is one of three members of the Irish Marketing partnership, but is not an officer, nor does he have any decision-making or day-to-day operational authority in the partnership, the filing stated.
In the meantime the business plan for VEM has changed and the company no longer intends to operate as a pooled investment vehicle, but rather will primarily be a retail energy provider in deregulated natural gas markets. Atha is one of several employees responsible for various activities such as gas purchasing, marketing and other matters related to retail customers. In view of these actions VEM maintains that it qualifies for market-based rate authority.
In addition to the consent order, Whalen and Atha had entered into agreements with the U.S. Attorney's Office of the Northern District of California and the Fraud Section of the Criminal Division of the Justice Department, pleading guilty to felony charges of conspiracy to manipulate the price of natural gas. They each were sentenced to three years of probation and $5,000 fines (see Daily GPI, June 21, 2006). Both have been granted early termination of their probation terms, Atha on Nov. 11, 2008 and Whalen on March 9.
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