For Release: July 29, 2003
WILLIAMS COMPANIES AND WILLIAMS ENERGY MARKETING AND TRADING PAY $20 MILLION TO SETTLE COMMODITY FUTURES TRADING COMMISSION CHARGES OF ATTEMPTED MANIPULATION AND FALSE REPORTING
Energy Company and Its Subsidiary Settle Claims Under the Commodity Exchange Act That They Intentionally Reported False Natural Gas Price and Volume Information to Energy Reporting Firms in an Attempt to Affect Prices of Natural Gas
WASHINGTON D.C. - The Commodity Futures Trading Commission (CFTC) announced today the issuance of an administrative order (order) filing and simultaneously settling charges of attempted manipulation and false reporting against The Williams Companies, Inc. and its subsidiary, Williams Energy Marketing and Trading (collectively, Respondents). The order finds that from at least January 2000 through June 2002, Respondents reported false natural gas trading information, including price and volume information, to certain reporting firms. According to the order, price and volume information is used by the reporting firms in calculating published surveys or indexes (indexes) of natural gas prices for various hubs throughout the United States. The order finds that Respondents knowingly submitted false information to the reporting firms in an attempt to skew those indexes for Respondents’ financial benefit. According to the order, natural gas futures traders refer to the published indexes for price discovery and for assessing price risks. The CFTC found that the Respondents’ false reporting conduct violated the Commodity Exchange Act (CEA).
The order further finds that the Respondents specifically intended to report false or misleading or knowingly inaccurate market information concerning, among other things, trade prices and volumes, to attempt to manipulate the price of natural gas in interstate commerce, and that Respondents’ false reports and failure to report true market information were overt acts that furthered the attempted manipulation. According to the order, Respondents’ conduct constituted an attempted manipulation under the CEA, which, if successful, could have affected prices of NYMEX natural gas futures contracts.
The CFTC order requires Respondents to pay a civil penalty of $20,000,000, as well as cease and desist from further violations of the Act and regulations and comply with an undertaking to cooperate with the CFTC in this and related matters.
In consenting to the entry of the order and the findings in the order, the Respondents neither admitted nor denied the findings of the order or the allegations of the complaint. The Order recognizes Respondents’ cooperation in this matter.
James E. Newsome, Chairman of the CFTC, said "We are committed to identifying and sanctioning those entities that have operated outside of the law. 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."
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.”
The Williams’ investigation was 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.
The following CFTC Division of Enforcement staff were responsible for this case: Judith Slowly, Michael McLaughlin, Armand Nakkab, Elizabeth Brennan, Steven Ringer, Stephen J. Obie, Lenel Hickson and Vincent McGonagle. To see a copy of the settlement orders, go to the following Internet web address http://www.cftc.gov/
Media Case Contact, CFTC Division of Enforcement
Gregory G. Mocek, Director