In two days this week, the Commodity Futures Trading Commission (CFTC) has drawn $40 million in fines for attempted natural gas market manipulation and false price reporting to gas index publications. On Monday, the CFTC announced a $20 million settlement agreement with EnCana, and on Tuesday a nearly identical settlement was reached with The Williams Companies and subsidiary Williams Energy Marketing and Trading, the CFTC said (see Daily GPI, July 29).

“We are committed to identifying and sanctioning those entities that have operated outside of the law,” CFTC Chairman James E. Newsome said in a statement regarding the Williams settlement on Tuesday. “I have stressed and continue to stress in the strongest way possible that those who do not play by the rules will be penalized. I believe this is not only our responsibility, but is also the appropriate role for the CFTC.”

The administrative order against Williams found that from at least January 2000 through June 2002, the company knowingly reported false gas trading information, including price and volume information, to certain unnamed reporting firms in an attempt to manipulate the indexes of natural gas prices that the reporting firms publish for various hubs throughout the United States.

The CFTC found that the false reporting violated the Commodity Exchange Act (CEA), and the manipulation, if successful, could have affected prices of NYMEX natural gas futures contracts. The CFTC order requires Williams and its subsidiary to cease and desist from further violations of the CEA and regulations and comply with an undertaking to cooperate with the CFTC in this and related matters. Williams neither admitted nor denied the findings of the order or the allegations of the complaint.

Williams is the fourth gas trading company, behind EnCana, El Paso Corp. and Dynegy Inc., to settle charges of attempted gas price manipulation (see Daily GPI, Dec. 20, 2002; March 27, 2003). Enron Corp. settled charges of actual manipulation of gas prices. The CFTC has subpoenaed data on a total of 19 gas trading companies from McGraw-Hill’s Platts, which has challenged the subpoena in court and is awaiting a ruling (see Daily GPI, July 15).

The investigations have been conducted under the auspices of the Corporate Fraud Task Force, created by President Bush in July 2002 to investigate allegations of fraud and illegal activity in the corporate world. Through May 2003, more than 300 investigations have been opened into potential corporate fraud matters. More than 350 defendants have been charged with some type of corporate fraud crime, and over 250 corporate fraud convictions or guilty pleas have been secured.

According to Director of Enforcement, Gregory G. Mocek, “Companies that violate our laws and the trust of the public are being held accountable. To preserve taxpayer resources, we continue to urge these companies strongly to step up and cooperate fully with the government.”

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