Concord Energy LLC and two traders were ordered by a Colorado court last Tuesday to pay $1.6 million in penalties for falsely reporting natural gas information to published indexes in an attempt to manipulate natural gas prices.
U.S. District Judge Wiley Daniel in Colorado entered consent orders levying penalties of $800,000 on Concord Energy, $350,000 on Darrell Danyluk and $450,000 on Concord Energy President Shawn McLaughlin. The orders also enjoin McLaughlin and Danyluk from applying for registration or engaging in a trading activity requiring registration, or acting as a principal of a registered company. The agency's litigation against a third trader, Matthew Reed, still is continuing.
The consent orders stem from a complaint filed by the Commodity Futures Trading Commission (CFTC) in February 2005 against the Lakeland,CO-based energy supplier, McLaughlin, Danyluk and Reed. It alleged that from at least May 2000 to the summer of 2002, while employed at Enserco Energy Inc., Danyluk and co-defendant Reed reported false, misleading or knowingly inaccurate gas trade information to various price index publishers, including Platts' Gas Daily, to benefit trading positions.
Concord Energy was formed in June 2002 by former traders from Enserco Energy as a natural gas trading and marketing company. The illegal price reporting activity began at Enserco and carried over to Concord Energy, according to the CFTC.
McLaughlin, who was executive vice president of Enserco and supervised other defendants, was charged with false reporting of natural gas trade data on at least one occasion, aiding and abetting, and as a controlling person liable for the acts of Danyluk and Reed at Enserco. In addition, the complaint charged Concord Energy and Reed with knowingly reporting false gas trade data for the period of July 2002 through October 2002.
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