For Release: April 26, 2007
U.S. Commodity Futures Trading Commission Files Action in Federal Court to Compel Commodity Index Provider Platts to Produce Relevant Documents in Government Energy Investigation
CFTC’s Fourth Time Seeking Enforcement of a Subpoena Directed at Platts for Information that Potentially Relates to a Manipulation or Attempted Manipulation in the Natural Gas Markets
Washington, D.C. — The United States Commodity Futures Trading Commission (CFTC) today filed an application in the United States District Court for the District of Columbia, seeking to enforce a subpoena for energy-related documents it served on McGraw-Hill Companies, Inc. in December 2006. As alleged in the application papers (hereinafter “memorandum” or “court filings”), the CFTC subpoenaed McGraw-Hill for documents to be produced by December 22, 2006, but McGraw-Hill refused to produce certain categories of responsive documents. The subpoena was issued as part of the CFTC’s ongoing energy investigations.
According to the memorandum filed with the court, the CFTC’s analysis of one energy company’s natural gas trading records, together with the testimony of that company’s traders are evidence that certain traders at the unnamed energy company may have manipulated or attempted to manipulate the price of natural gas in interstate commerce. The court filings note that the energy company submitted trade information to Platts, an entity owned by McGraw-Hill, for Platts’ use in calculating the index price of natural gas that it includes in its monthly Inside FERC Gas Market Reports.
More specifically, pursuant to its regulatory powers, the Commission is conducting a non-public investigation of the energy company to determine whether it manipulated or attempted to manipulate the price of physical natural gas at a certain natural gas delivery location to benefit the energy company’s financial trading positions (i.e. swaps). The court filings state that the CFTC subpoena seeks, among other things, McGraw-Hill’s documents concerning Platts’ use of that data in the indices that Platts calculates and disseminates. Platts’ Inside FERC price indices are used by energy companies, utilities, and speculators for price discovery, to assess price risks, and to actually price billions of dollars of natural gas transactions. Platts’ website, www.platts.com, bills the entity as “the world’s largest and most authoritative source of energy industry information and services.”
The CFTC three times previously sought enforcement of a subpoena directed to McGraw-Hill for similar documents relating to other energy companies. As in this action, McGraw-Hill claimed that the information sought by the CFTC is privileged. In each of those actions, the federal district courts ordered that McGraw-Hill produce the documents. See CFTC v. McGraw-Hill Companies, Inc., 390 F. Supp.2d 27 (D.D.C. Oct. 4 2005); CFTC v. Whitney, 441 F. Supp.2d 61 (D.D.D. July 25, 2006); and CFTC v. Bradley, et al., Dkt. Nos. 140 and 154 (N.D.Ok Case No. 05-CV-62).
The CFTC staff members responsible for this motion include: Kim Bruno, Anne Termine, Charlotte Ohlmiller, Kathleen Banar, Richard Glaser, and Richard Wagner.
Last Updated: May 8, 2007