CORAL ENERGY PAYS $30 MILLION TO SETTLE U.S. COMMODITY FUTURES TRADING COMMISSION CHARGES OF ATTEMPTED MANIPULATION AND FALSE REPORTING
WASHINGTON, D.C. - The U.S. Commodity Futures Trading Commission (CFTC) announced today the issuance of an administrative order (order) initiating and simultaneously settling charges of false reporting and attempted manipulation of natural gas transactions by Coral Energy Resources, L.P. (Coral).
The order finds that from at least January 2000 through September 2002, Coral reported false, misleading or knowingly inaccurate natural gas trading information, including price and volume information, to certain price reporting firms such as Inside FERC’s Gas Market Report, and Natural Gas Intelligence. According to the order, these reporting firms and others use price and volume information in calculating surveys or indexes (indexes) of natural gas prices for various hubs throughout the United States. According to the order, participants in the natural gas markets use these indexes to price and settle commodity transactions. Additionally, natural gas futures traders refer to the published indexes for price discovery and for assessing price risks. Consequently, the false information reported to reporting firms by Coral was market information that affected or tended to affect the price of natural gas in interstate commerce, according to the order. The order charges that the conduct of Coral violated the Commodity Exchange Act (CEA).
The order further finds that Coral attempted to manipulate natural gas prices by delivering trade information to the price reporting firms with the intent to affect the market price of natural gas. The order finds that Coral reported information about trades that never occurred, altered price and volume information for certain trades, and failed to report some actual trades, all with the intent to affect the market price of natural gas. According to the order, Coral’s conduct constitutes an attempted manipulation under the CEA, which, if successful, could have affected prices of natural gas in interstate commerce or of NYMEX natural gas futures and options contracts.
The CFTC order requires Coral to pay a civil monetary penalty of $30 million, as well as to cease and desist from further violations of the CEA and CFTC regulations. The CFTC order further requires Coral to comply with an undertaking to cooperate with the CFTC in this and related matters. In consenting to the entry of this order, Coral neither admitted nor denied the findings of fact in the order.
In commenting on this action, CFTC Acting Chairman Sharon Brown-Hruska said:
“With the settlement of this action, the Commission has thus far imposed approximately $250 million in civil monetary penalties against those in the natural gas markets who violated the Commodity Exchange Act. As a Commissioner and now the Acting Chairman, I believe that for markets to prosper, they must not be constrained by violative behavior. In turn, I am a sincere advocate of utilizing all of the resources in our enforcement program to promote market integrity. I commend the hard work and devotion of the Division of Enforcement staff that worked on the Coral matter, and as with all the other energy cases that came before it, I am proud of the result.”
The Commission appreciates the cooperation of the President’s Corporate Fraud Task Force in this matter and in the Commission’s ongoing energy investigations.
The CFTC staff responsible for this matter are: Joseph Konizeski, John Dunfee, Timothy Mulreany, Mary Kaminski, Paul Hayeck, and Joan Manley.