The U.S. Commodity Futures Trading Commission (CFTC) obtained a $475,000 judgment against former natural gas trader Matthew Reed for false reporting of prices to industry price index publishers.
The consent order, entered on Nov. 13 by Judge Wiley Y. Daniel of the U.S. District Court for the District of Colorado, permanently prohibits Reed from applying for CFTC registration, engaging in activity requiring registration, or acting as a principal of any registered entity or person.
The CFTC's 2005 complaint alleged that between May 2000 and fall 2002, Reed, while employed at Enserco Energy Inc. and Concord Energy LLC, knowingly delivered reports containing false, misleading and inaccurate gas trade information to various price index publishers, including Platts' Gas Daily, to benefit trading positions held by Enserco and Concord (see NGI, Feb. 7, 2005). The complaint also alleged that Reed attempted to manipulate the price of natural gas in interstate commerce by reporting the false information.
In an effort to have a greater impact on reporting firm indices, Reed and a co-worker engaged in a scheme whereby each reported fictitious trade information for not only those locations in his geographic region, but within the others' geographic region as well, the complaint alleged. Reed allegedly referred to this scheme as "double dipping."
Entry of the consent order concludes CFTC action against Reed and his co-defendants -- Darrell Danyluk, Shawn McLaughlin and Concord -- in the litigation before Judge Daniel.
On March 12, 2007, Daniel entered consent orders requiring McLaughlin and Danyluk to pay civil penalties of $450,000 and $350,000, respectively, and requiring Concord to pay an $800,000 civil penalty (see NGI, March 19, 2007). Separately in July 2003, the CFTC entered a settlement order under which Enserco paid a $3 million penalty. A total of $5.075 million in penalties was assessed in these actions due to CFTC litigation.
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