Western Gas Resources Inc. announced Thursday it has entered into a settlement agreement to pay $5.95 million in a civil suit in which Western was charged with manipulating the prices of natural gas futures on the Nymex in violation of the Commodity Exchange Act, by reporting allegedly “inaccurate, misleading and false trading information” to natural gas index publishers.
Western, which did not admit liability in the action, was one of about 15 defendants which had settled actions by the Commodity Futures Trading Commission (CFTC), and were then charged by various parties in the civil suit. Western is the only one to have settled, a company source said, describing it as a business decision. The case was recorded as “Natural Gas Commodity Litigation, United States District Court, Southern District of New York, Case No. 03-CV-6186 (vm) (S.D.N.Y.)”
The complaint, generally known as the “Cornerstone action,” was filed by the primary plaintiff, Cornerstone Propane Partners LP., and other natural gas futures contract traders on Nymex.
In the second quarter of 2005, Western will record an after-tax charge to earnings of $3.7 million, or $0.05 per common share in connection with the settlement.
The Denver-based independent gas producer, agreed to pay a civil penalty of $7 million in its CFTC settlement to resolve charges of attempted manipulation and reporting of false information by traders on natural gas transactions in the 1999-2002 time period. As part of the settlement, Western Gas neither admitted nor denied any wrongdoing.
The company said last September that during an internal review it had discovered that certain employees in its marketing department provided false information about gas transactions to energy publications. In its order, the CFTC noted the company’s “extraordinary level of cooperation” (see Daily GPI, July 2, 2004).
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