Collapses

In response to collapses at Peregrine Financial Group Inc. (see Daily GPI, July 11) and MF Global Holdings Ltd. (see Daily GPI, Nov. 14, 2011), both of which involved the misappropriation of customer funds, the Commodity Futures Trading Commission (CFTC) Monday voted out a proposed set of rules to provide a greater level of protection to customers that participate in the futures and swaps markets, including the protection of customer funds held by futures commission merchants (FCM) and derivatives clearing organizations.

Andrew Fastow, whose ingenious off-the-book transactions as CFO of Enron Corp. enriched him while helping to precipitate one of the biggest corporate collapses in history, has been released to a community corrections facility in Houston until he completes his prison sentence in mid-December, according to the Federal Bureau of Prisons. Fastow, now 49, was facing 98 criminal charges but pleaded guilty to two criminal counts and agreed to testify for the government against his former colleagues (see Daily GPI, Sept. 27, 2006). His key testimony led to the convictions of several Enron executives, most notably founder Kenneth Lay and former CEO Jeffrey Skilling, who were convicted on numerous charges in 2006 (see Daily GPI, May 26, 2006). Skilling, convicted on 19 criminal counts, is scheduled to be released from federal prison in 2030; he is appealing. Lay was convicted on 10 criminal counts, but died before sentencing and the convictions were dismissed. Wife Lea Fastow, also a former Enron employee, served a one-year prison term; she continues to live in Houston with the couple’s two children.

Lea Fastow’s lawyers and the prosecution had signed off on a deal earlier in the week in which she would have pleaded guilty to a tax evasion charge and would have been sent to federal prison for five months (see Daily GPI, Jan. 9). However, U.S. District Judge David Hittner, who is overseeing Lea Fastow’s case, said he would only accept the agreement with a pre-sentencing report and reserving the right to increase the prison term.

Following a week of back and forth negotiations in Houston, a plea bargain deal apparently collapsed at midday Friday for Lea Fastow, former assistant treasurer of Enron Corp. and the wife of its former CFO. However, her attorney indicated that negotiations would continue over the weekend.

Negotiations to sell Vintage Petroleum Inc. some of El Paso Corp.’s producing properties in the Uinta Basin of Utah have ended after the two companies failed to reach an agreement before the scheduled closing date. The $52.5 million acquisition, announced in November, would have given Vintage an 80% operated working interest in about 200,000 net acres (see Daily GPI, Nov. 12, 2003).

Huge declines of 40 to 50 cents were seen in Friday’s cash market as futures prices finally gave way to significant downward pressure that had been mounting all week, pulling down the cash market with it.