For Release: October 2, 2006
U.S. Commodity Futures Trading Commission Settles Natural Gas Attempted Manipulation Lawsuit with Joseph P. Foley, a Former American Electric Power Company, Inc. Trader
Defendant Ordered to Pay $350,000 in Civil Monetary Penalties
Washington, D.C.— The U.S. Commodity Futures Trading Commission (CFTC) announced today that it has entered into a consent order (order) with defendant Joseph P. Foley (Foley) requiring Foley to pay $350,000 in civil monetary penalties to settle charges that he directed those he supervised as a former Desk Head at American Electric Power Company, Inc. (AEP) to falsely report natural gas trades, and attempted to manipulate natural gas prices. The order also permanently enjoins Foley from applying for registration, engaging in any activity requiring registration, or acting as a principal as defined by the National Futures Association. The order resolves the CFTC’s lawsuit brought on September 14, 2005 in the U.S. District Court for the Southern District of Ohio (see CFTC Press Release 5114-05, September 20, 2005).
The CFTC’s complaint charged that, from at least November 2000 through September 2002, AEP traders, at Foley’s direction, repeatedly reported false natural gas trading information, including price and volume information, to firms that compile natural gas price indexes such as Platts, a division of the McGraw-Hill Companies. The complaint alleged that Foley knowingly directed the delivery of false information to price index compilers in an attempt to skew those indexes for his financial benefit.
Commenting on the settlement, CFTC Director of Enforcement Gregory Mocek stated: “Today’s settlement further demonstrates that false reporting to energy index providers will be discovered, and the culprits will be punished. I thank our enforcement staff for their tireless efforts and focus in the energy arena over the last four years. As a result of their diligent work, dozens of energy traders and companies have been investigated and prosecuted for false reporting or attempting to manipulate energy indexes.”
Federal Government Has Collected $81 Million from AEP and its Subsidiaries
On January 26, 2005, the CFTC settled with AEP and its subsidiary AEP Energy Services Inc. (AEPES) false reporting and attempted manipulation charges for $30 million (see CFTC Press Release 5041-05, January 26, 2005). In addition to settling charges brought by the CFTC, AEPES entered into a deferred prosecution Agreement (Agreement) with the U.S. Department of Justice and the U.S. Attorney’s Office for the Southern District of Ohio to avoid federal criminal charges. The Agreement requires AEPES to pay an additional $30 million criminal penalty to resolve an investigation into AEPES’ false reporting of natural gas trades.
The Office of Market Oversight and Investigations of the Federal Energy Regulatory Commission (FERC) also announced on January 26, 2005, that it had entered into a Stipulation and Consent Agreement with AEP, AEPES, and American Electric Power Service Corporation, another subsidiary of AEP, under which AEP will pay a further civil penalty of $21 million to settle claims that former AEP affiliates Jefferson Island Storage and Hub, LLC and Louisiana Intrastate Gas Company violated FERC regulations.
The following CFTC Division of Enforcement staff were responsible for this case: Gregory Compa, David W. MacGregor, Lenel Hickson, Jr., Stephen J. Obie, Richard Wagner, and Vincent McGonagle.
Last Updated: April 22, 2010