For Release: July 28, 2003
ENCANA TRADING UNIT PAYS $20 MILLION TO SETTLE COMMODITY FUTURES TRADING COMMISSION CHARGES OF ATTEMPTED MANIPULATION AND FALSE REPORTING
WD Energy Services, Inc. (Formerly Known As Encana Energy Services, Inc.) Settles CFTC Claims That It Intentionally Reported False Natural Gas Trade Information To Energy Reporting Firms In An Attempt To Manipulate The Price Of Natural Gas Contracts
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced today that it filed and simultaneously settled an administrative action involving charges of attempted manipulation and false reporting by WD Energy Services, Inc (WD Energy), the U.S. based energy trading unit of EnCana Corporation (EnCana).
In commenting on this matter, CFTC Chairman James E. Newsome said: “Today’s settlement is further indication of the Commission’s commitment to uncover and prosecute false reporting and manipulation in the markets that we oversee in an expeditious, yet thorough, manner so that wrongdoers are appropriately punished. We appreciate the cooperation of the President’s Corporate Fraud Task Force and the National Futures Association in this matter.”
The CFTC settlement order (order) finds that from at least June 2000 through at least August 2001, WD Energy reported false natural gas trading information, including price and volume information, to certain reporting firms. The order further finds that one employee of WD Energy discussed false reporting with traders at two other energy companies. According to the order, price and volume information is used by the reporting firms in calculating published indexes of natural gas prices for various hubs throughout the United States. The order states that natural gas futures traders refer to the published indexes for price discovery and for assessing price risks. The order finds that WD Energy knowingly submitted false information to the reporting firms in an attempt to skew those indexes for its financial benefit, and that WD Energy’s false reporting conduct violated the Commodity Exchange Act (CEA).
The order also finds that WD Energy specifically intended to report false or misleading or knowingly inaccurate market information concerning trade prices and volume of trading in an attempt to manipulate the price of natural gas in interstate commerce, and that WD Energy’s provision of the false reports and failure to report true market information were overt acts that furthered the attempted manipulation. According to the order, WD Energy’s conduct constituted an attempted manipulation under the CEA, which, if successful, could have affected prices of NYMEX natural gas futures contracts.
The CFTC order provides for the following sanctions:
In consenting to the entry of the order and the findings in the order, WD Energy and EnCana neither admitted nor denied the findings of the order. WD Energy provided significant cooperation to staff of the CFTC’s Division of Enforcement during the course of this investigation. The CFTC factored this cooperation into its decision to accept WD Energy’s settlement offer.
The following CFTC Division of Enforcement staff were responsible for this case: Ted Dowd, Michael Solinsky, Stephen M. Humenik, Allison Page, Gretchen Lowe and Richard Wagner.
To see a copy of the settlement order, go to the following Internet web address http://www.cftc.gov.
Media Case Contacts, CFTC Division of Enforcement:
Gregory G. Mocek, Director