For Release: May 20, 2003
CFTC CLAIMS MCGRAW-HILL COMPANIES FLOUTED FEDERAL AGENCY SUBPOENAS
Commodity Regulator Asks US District Court for Order Requiring
McGraw-Hill To Provide Documents Demanded By Energy Investigation
WASHINGTON, D.C. -- The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of an application to enforce compliance with two document subpoenas issued to the McGraw-Hill Companies (McGraw-Hill) as part of an ongoing CFTC investigation of corrupt energy trading practices. The application was filed in the U.S. District Court for the Southern District of Texas.
The application, filed on May 19, 2003, states that McGraw-Hill obtains energy price information from energy trading companies and uses it to create surveys or indexes of natural gas prices for various natural gas trading hubs throughout the United States. Platts, a division of McGraw-Hill, calculates these indexes, which are then used by market participants, including natural gas futures traders, for price discovery and for assessing price risks. The CFTC’s subpoena enforcement action alleges that McGraw-Hill failed to comply with two CFTC subpoenas seeking documents related to trade data submitted by various energy trading companies to McGraw-Hill.
The CFTC’s subpoenas were issued as part of a broad investigation of energy trading practices, including public news reports that the false reporting of trade data to McGraw-Hill and the possible manipulation of its indexes were rampant throughout the natural gas industry. To date, the CFTC has issued orders finding that traders for Dynegy Marketing and Trade, West Coast Power LLC and El Paso Merchant Energy, L.P. made false reports to McGraw-Hill. These companies were fined a total of $25 million in connection with these orders. Other companies have made public disclosures to the same effect.
Gregory G. Mocek, Director of the CFTC’s Division of Enforcement, stated:
“This action is part of our vigorous pursuit of all forms of misconduct that violate the Commodity Exchange Act. We expect and demand full compliance with our subpoenas. McGraw-Hill claims that it is cooperating with government regulators. Unfortunately, its definition of cooperation falls far short of the meaning of cooperation.”
McGraw-Hill has been ordered to appear before the Honorable Lynn N. Hughes on June 2nd at 3:30 pm, to show cause, if there be any, why it should not be ordered by the Court to produce documents as required by the subpoenas.
The following staff of the Division of Enforcement were responsible for this
action: Elizabeth Brennan, Gregory Compa, Joseph Rosenberg, Linda Peng,
David MacGregor, Steven Ringer, Lenel Hickson, Stephen J. Obie, Vincent
McGonagle, and Gregory G. Mocek.
Gregory G. Mocek
Director of the Division of Enforcement
(202) 418 - 5378
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