American Electric Power (AEP) on Friday said it would “fully comply” with an informal data request from the Securities and Exchange Commission (SEC) asking the company to voluntarily provide documents related to “round-trip” or “wash” trades. A number of other companies have previously confirmed receiving similar informal requests from the SEC.

The types of trades under scrutiny from the SEC and several other federal agencies, including FERC and the Commodities Futures Trading Commission (CFTC), are designed to artificially inflate trading volumes and revenues.

AEP has already complied with round trip trade-related information requests from both FERC and the CFTC and has gone on record at FERC as saying that it did not engage in any round trip or wash transactions (see Power Market Today, May 31).

AEP earlier this year completed a review of its trading activities from Jan. 1, 1999 through March 31, 2002, a period that included more than 1.2 million trading transactions.

The company identified and subjected to further review domestic trading transactions that involved sequential trades with the same terms and counterparties, which amounted to approximately one-quarter of 1% of total trading transactions.

AEP said that the total contribution of these transactions to gross revenue is not material. The company believes that substantially all of these transactions involve economic substance and risk transference and do not constitute round trip or wash sales.

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