Morgan Stanley Capital Group Inc. revealed in a filing with the Securities and Exchange Commission that it has been subpoenaed by the Commodity Futures Trading Commission (CFTC) in an energy trading investigation. The company, which markets gas and power, said it would cooperate with the CFTC but failed to provide further details about the investigation.

The CFTC is among several federal agencies investigating a variety of issues and potential abuses in the energy trading business currently, including “wash” trading, California market manipulation and the potential manipulation of published energy industry gas and power price indices.

The CFTC last week subpoenaed energy industry publishing firm Platts, a division of McGraw Hill. Meanwhile, Dynegy and American Electric Power also recently stated that they had discovered attempts by some of their own traders to manipulate published prices. AEP fired several employees for the actions (see Daily GPI, Oct. 11).

Dynegy said it hadn’t terminated any employees but deterimed that false price data was provided to publications. It said it discovered the inaccuracies during an internal review of its trading activities that is being conducted in connection with an ongoing CFTC. Dynegy noted it was among many companies providing data to publications so it couldn’t determine whether the inaccurate data had any impact on the published indices. The company said that in the future all price data would be verified by the office of Dynegy’s chief risk officer before being sent to publications. Dynegy also recently settled with the Securities and Exchange Commission in its investigation into wash trading and certain off-balance sheet transactions. The company paid a $3 million fine but did not admit to any abuses (see Daily GPI, Sept. 25).

The staff of the Federal Energy Regulatory Commission (FERC) recently called into question some published gas price data during the California energy crisis, stating that it may have been manipulated. FERC Chairman Pat Wood said during a speech at an American Petroleum Institute conference on Tuesday that companies sending false data to publications for use in indices should be punished by federal regulators. However, he said FERC currently lacks sufficient authority to handle such abuses. Congress may need to strengthen the Commission’s authority in that area or give other agencies, such as the Justice Department or the CFTC, more power to go after companies intentionally attempting to manipulate the published prices, he said, according to new reports.

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