CFTC to sue AEP over false gas trades
Ohio-based utility American Electric Power (AEP) has been charged with reporting 2,800 false natural gas trades to energy price index companies, such as Platts, and attempting to manipulate natural gas prices. The charges, levied by the US Commodity Futures Trading Commission (CFTC), mark the second time that a US regulator has sought to litigate, rather than settle, such a case - the first instance being against bankrupt energy trader Enron. Each alleged violation could carry a $120,000 civil penalty.
AEP said that after learning in September 2002 of false reporting of gas price information it undertook its own internal investigation of gas price reporting practices. AEP determined that five then-current employees had submitted inaccurate gas trading information to trade publications. The company terminated the five employees' contracts, self-reported the incident to the Federal Energy Regulatory Commission and the CFTC, publicly announced the employee terminations and put into place procedures to prevent a recurrence of the inaccurate submission of gas trading information.
“We have been co-operating with the CFTC in an attempt to seek resolution to this matter,” said Jeffrey Cross, AEP’s general counsel. “While the possibility of civil action always existed, we are surprised the CFTC chose to file at this time. We still believe that a settlement is possible and we are open to that possibility.”
US regulators have settled with a number of energy companies following charges of attempted market manipulation. Earlier this month, for example, Duke Energy Trading and Marketing agreed to pay $28 million to settle CFTC charges that it manipulated the natural gas market between 2000 and 2002.
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