For the second time this week, a Houston district court judge has dismissed a criminal charge against a former energy trader accused of reporting false natural gas pricing information to an industry publication. Judge Nancy Atlas late Wednesday dismissed one count of false reporting against former El Paso Merchant Energy executive Todd Geiger, which mirrors the court’s dismissal of three false reporting counts against former Dynegy trader Michelle Valencia a day earlier (see Daily GPI, Aug. 28).

Atlas let stand one count of wire fraud against Geiger, and the four counts of wire fraud against Valencia. Both have pleaded not guilty.

Earlier this week, lawyers for both of the ex-traders asked Atlas to dismiss the false reporting charges, reasoning that the law under which Valencia and Geiger had been indicted, the Commodity Exchange Act, was vague, over broad and incorrectly applied. While Atlas denied motions related to the vagueness and incorrect application of the law, she found that the portion of the law used by prosecutors was in fact too broad.

In both Geiger’s and Valencia’s rulings, Atlas said that the Commodity Exchange Act, as written, does not require a person to know that information he or she provided was false or misleading.

Atlas, who used the same language in both rulings, wrote that “the court concludes that Congress’ failure to require a defendant be aware that the information she provided was false or misleading renders the statute over broad on its face.” The 55-page ruling noted that a literal interpretation of the law “could subject citizens to strict liability for inadvertently providing false or misleading information.”

Atlas said that the “government’s offer to prove that Valencia knew she was delivering false information, as alleged in the indictment, and its willingness to bear that burden at trial do not save the statute from a…legal overbreadth attack.”

The U.S. Attorney’s Office in Houston is expected to ask Atlas to either reconsider the Valencia ruling, or it may move to appeal it. A court hearing for Geiger is set for Sept. 3, while Valencia’s court date is Sept. 8.

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