Western Gas Resources, a Denver, CO-based independent gas producer, agreed Thursday to pay a civil penalty of $7 million in a settlement with the Commodity Futures Trading Commission (CFTC) to resolve charges of attempted manipulation and reporting of false information by traders on natural gas transactions in the 1999-2002 time period.

At the same time, the CFTC filed a complaint in a federal district court in Minneapolis, MN, charging power generator NRG Energy Inc. with “knowingly” providing fake information on gas trades in 2001 and 2002. The agency asked the U.S. District Court for the District of Minnesota to permanently enjoin NRG Energy from engaging in further violations of the Commodity Exchange Act (CEA).

In both cases the alleged false reports were made to Platts Gas Daily, owned by McGraw-Hill Companies Inc.

Beginning in June 1999 through December 2002, the CFTC charged that Western Gas traders attempted to manipulate gas prices and reported false information, including price and volume data, to Gas Daily’s published price index.

The CFTC order “finds that Western specifically intended to manipulate the price of natural gas and that Western’s false reports of transaction information were the overt acts designed to complete the attempted manipulation,” the agency said.

As part of the settlement, Western Gas neither admitted nor denied any wrongdoing. The company said last September during an internal review it had discovered that certain employees in its marketing department provided false information about gas transactions to energy publications. In its order the CFTC noted the company’s “extraordinary level of cooperation.”

In less than two months, the company investigated its trade reporting activities and provided the CFTC’s Division of Enforcement with details of its analysis and findings from the internal investigation, the agency said. Western Gas also produced subpoenaed documents and records and promptly disclosed the existence of the misconduct to the public. It hired over 20 additional staff to review its audiotaped phone conversations and fired the staff member who was involved in the false reporting.

Since then, Western Gas said it has discontinued the practice of reporting pricing information to published gas price indexes.

The company said the $7 million settlement would result in a charge of approximately $0.09 per fully diluted share of common stock and will be reflected in its second quarter results.

The complaint against NRG Energy charges that the company from at least August 2001 through May 2002 reported false information about gas trades to Gas Daily. Specifically, it contends that the company provided bogus information on “hundreds of natural gas trades.”

NRG Energy emerged from seven months of bankruptcy in December 2003. It was not immediately known whether the company still was trading natural gas. NGI’s phone calls to the company Thursday were not returned.

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