Energy trading leader Mirant Corp.’s stock was pelted on Wall Street last week after it disclosed that the Atlanta district office of the Securities and Exchange Commission (SEC) had opened an informal inquiry into the company’s accounting and trading activities. The stock of the Atlanta-based company was trading at about $3.10 a share mid-day Friday, down from the closing price of $3.49 for the prior week.

The SEC initiated the inquiry less than a week after Mirant revealed it may have overestimated its assets and liabilities by a total of $253 million during 2001, including an $85 million overstatement of a natural gas inventory asset. Mirant also cited a $100 million overstatement of an accounts payable liability, and a potential $68 million overstatement of an accounts receivable asset. The company, which has begun an internal probe of the accounting issues, said the combined figures represented a fraction of its $22.8 billion balance sheet.

“The notification letter we received [from the SEC] did not surprise us. When companies report accounting issues, informal inquiries from the SEC usually follow…We will cooperate fully with this request for information,” said Doug Miller, Mirant’s senior vice president and general counsel.

As part of its inquiry, Mirant said the SEC has requested additional information about Mirant’s recently disclosed shareholder litigation, any bogus round-trip trading activity, and related to the Federal Energy Regulatory Commission’s probe into the trading practices of energy suppliers in California and other western markets.

Mirant joins the growing list of energy traders that are being investigated — either formally or informally — by the SEC: Dynegy, Duke Energy, El Paso Corp., CMS Energy and Reliant Energy. Parallel probes into questionable trading activities also are being conducted by the Department of Justice, FERC and the Commodity Trading Futures Commission.

FERC is expected to submit a report to the Senate Energy and Natural Resources Committee and four other committees soon on the status of its six-month probe into allegations that suppliers manipulated gas and electricity prices in western markets. The “best bet” is the report will be forwarded to Congress today (Aug. 12), said a FERC spokesman last week.

Mirant reported it has hired the law firm of King & Spalding to conduct an independent review of its 2001 financial results, and to provide advice to Mirant’s Audit Committee. Mirant CEO and President Marce Fuller has said she does not believe the accounting errors will “adversely impact” the company’s results for the first and second quarters of 2002, and she noted Mirant will “move aggressively” to determine what, if any, affect they will have on its 2001 results.

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