Posted on 12/06/2004 3:33:26 PM PST by MeneMeneTekelUpharsin
WASHINGTON (CBS.MW) -- Mirant Americas Energy Marketing, a subsidiary of Mirant Corp. will pay a $12.5 million civil penalty to settle charges that it tried to manipulate natural gas markets in 2000 and 2001, the Commodity Futures Trading Commission said Monday. From January 2000 through December 2001, Mirant Americas (MIRKQ: news, chart, profile) reported false information on natural gas transactions in order to manipulate indexes compiled by industry newsletters, the CFTC said in its order.
The commission also found that between January 2000 and October 2000, Mirant traders located in the West inflated the volumes and prices of trades it reported to try skew the indexes to benefit the company's trading positions. These indexes calculate natural gas prices for various trading hubs in the United States, which are used for price discovery and for assessing price risks. Movement in published index prices can affect traders' profits and inflate prices that electric utilities and businesses pay for natural gas. An increase in the price at a central hub signals either stronger demand or weakened supply, impacting futures trading.
Index prices also are used to price large volumes of natural gas and set royalty payments for owners of mineral rights. "[T]he attempted manipulation of the price of natural gas by Mirant Americas traders, if successful, could have affected prices of New York Mercantile Exchange natural gas futures contracts," CFTC said in a press release. Mirant violated the Commodity Exchange Act, which makes it illegal to knowingly communicate false market information in an attempt to influence prices of commodities, CFTC said. By agreeing to pay the civil penalty, Mirant neither admits nor denies any wrongdoing. The U.S Attorney's Office in Houston has recently unsealed a number of indictments against individual natural gas traders formerly employed by El Paso Merchant Energy, Dynegy, and Reliant Energy and charged with reporting bogus trades to industry publications.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.