The former chief of the American Electric Power’s (AEP) Gulf trading desk agreed to pay a $350,000 fine to the Commodity Futures Trading Commission (CFTC) to settle charges that he directed AEP natural gas traders to submit misleading or knowingly inaccurate information to two Platts’ publications, Gas Daily and Inside FERC’s Gas Market Report for almost two years (see Daily GPI, Sept. 21, 2005).
Joseph P. Foley, who was Gulf desk chief of AEP Energy Services Inc., also was permanently enjoined by the CFTC from applying for registration, engaging in any activity requiring registration, or acting as a principal as defined by the National Futures Association.
The order resolves a CFTC lawsuit brought last year in U.S. District Court for the Southern District of Ohio.
The CFTC complaint charged that from at least November 2000 through September 2002 AEP traders, at Foley’s direction, repeatedly reported false natural gas trading information, including prices and volumes. The complaint alleged Foley knowingly directed the delivery of false information to price index compilers in an attempt to skew those indexes for his financial benefit.
“Today’s settlement further demonstrates that false reporting to energy index providers will be discovered, and the culprits will be punished,” said CFTC’s Gregory Mocek, the director of enforcement. Mocek said the enforcement staff’s efforts have resulted in investigations into dozens of energy traders and companies for false reporting or attempting to manipulate energy indexes.
So far, the federal government has collected about $81 million in fines from AEP and its subsidiaries related to false reporting or attempts to manipulate energy indexes.
AEP Energy Services in Jan. 2005 entered into a deferred prosecution agreement with the Department of Justice and the U.S. Attorney’s Office for the Southern District of Ohio to avoid federal criminal charges related to false reporting (see Daily GPI, Jan. 27, 2005). The agreement required the AEP subsidiary to pay $30 million to resolve an investigation into its false reporting of natural gas trades.
The Office of Market Oversight and Investigations of the Federal Energy Regulatory Commission also in Jan. 2005 entered into a stipulation and consent agreement with AEP, under which the company agreed to pay a civil penalty of $21 million to settle claims that former affiliates Jefferson Island Storage and Hub LLC and Louisiana Intrastate Gas Co. violated FERC regulations.
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