U.S. COMMODITY FUTURES TRADING COMMISSION IMPOSES $7 MILLION CIVIL PENALTY ON ENERGY FIRM
Western Gas Resources, Inc. Charged With False Reporting and Attempted Manipulation in Violation of the Commodity Exchange Act
WASHINGTON, D.C. - The Commodity Futures Trading Commission (CFTC) announced today the issuance of an administrative order instituting and simultaneously settling charges under the Commodity Exchange Act (CEA) of attempted manipulation and false reporting against Western Gas Resources, Inc. (Western), based in Denver, Colorado.
The order finds that, from June 1999 through February 2001, Western reported false information, including price and volume information, to Platt’s Gas Daily concerning natural gas cash transactions in an attempt to manipulate the price of natural gas by skewing the published indexes in an attempt to increase the financial benefit Western derived from certain spread positions Western traded in the physical marketplace.
According to the order, price and volume information is used by Gas Daily to calculate published surveys or indexes of natural gas prices for various hubs throughout the United States. The order also states that natural gas futures traders refer to the published indexes for price discovery and for assessing price risks.
The order finds that Western specifically intended to manipulate the price of natural gas and that Western’s false reports of transaction information were the overt acts designed to complete the attempted manipulation. According to the order, Western’s conduct constituted an attempted manipulation under the CEA, which, if successful, could have affected prices of New York Mercantile Exchange natural gas futures contracts.
The order further finds that from March 2001 through December 2002, Western reported false or misleading information, including price and/or volume information, to Gas Daily concerning natural gas cash transactions.
The order requires Western to pay a civil monetary penalty of $7 million, to cease and desist from further violations of the CEA and its regulations, and to comply with various undertakings, including an undertaking to cooperate with the CFTC in this and related matters.
In consenting to the entry of the order, Western neither admitted nor denied the findings in the order. The CFTC recognizes the substantial cooperation of Western in the investigation of this matter, and afforded substantial weight to that cooperation in its decision to accept Western’s settlement offer.
The CFTC appreciates the cooperation of the President’s Corporate Fraud Task Force and the National Futures Association in this matter and in the Commission’s ongoing energy investigations.
This case reflects the work of the following individuals: Michael J. Otten, Judy T. Lee, Lacey Dingman, Ted Dowd, Kim Bruno, Michael Solinsky, Kathleen M. Banar, Richard Glaser, and Richard B. Wagner.
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