For Release: November 17, 2008
Former Enserco Energy Trader Matthew Reed to Pay $475,000 to Settle CFTC Charges of False Reporting and Attempted Manipulation of Natural Gas Prices
Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) announced today that it obtained a $475,000 civil monetary penalty judgment against Matthew Reed, settling CFTC charges that he reported or caused to be reported false natural gas trade information to compilers of natural gas indexes in an attempt to manipulate natural gas prices. (See CFTC Press Release 5045-05, February 1, 2005.)
The consent order, entered on November 13, 2008, by the Honorable Wiley Y. Daniel of the U.S. District Court for the District of Colorado, also permanently prohibits Reed from applying for CFTC registration, engaging in any activity requiring registration, or acting as a principal of any registered entity or person.
The CFTC’s 2005 complaint alleged that, between May 2000 and the fall of 2002, Reed, while employed at Enserco Energy, Inc. (Enserco) and Concord Energy, LLC (Concord), knowingly delivered reports containing false, misleading, and knowingly inaccurate natural gas trade information to various price index compilers, including to Gas Daily, to benefit trading positions held by Enserco and Concord. The complaint also alleged that Reed attempted to manipulate the price of natural gas in interstate commerce by reporting false information to compilers of natural gas indexes.
Specifically, the complaint alleged that, in an effort to have a greater impact on reporting firm indices, Reed and a co-worker engaged in a coordinated scheme whereby each reported fictitious trade information for not only those locations in his geographic region, but within the others’ geographic region as well. Reed allegedly referred to this scheme as “double dipping.”
CFTC Obtains More Than $5 Million in Penalties in its Litigations Against Reed, Other Former Enserco Traders, Concord, and Enserco
Entry of the consent order concludes the CFTC’s litigation against Reed and his co-defendants in the litigation before Judge Daniel: Darrell Danyluk, Shawn McLaughlin, and Concord Energy, LLC. On March 12, 2007, Judge Daniel entered consent orders requiring McLaughlin and Danyluk to pay civil monetary penalties of $450,000 and $350,000, respectively, and requiring Concord to pay an $800,000 civil monetary penalty. (See CFTC Press Release 5300-07, March 14, 2007.)
Separately, in July 2003, the CFTC entered a settlement order under which Enserco paid a $3 million civil monetary penalty (see CFTC Press Release 4826-03, July 31, 2003). As a result of the CFTC’s litigation in these actions, a total of $5.075 million in penalties was assessed.
The following current and former CFTC staff members were responsible for this case: Theodore Joseph Dowd II, Joseph F. Vargyas, James A. Garcia, Glenn I. Chernigoff, August A. Imholtz III, Kassra Goudarzi, Michael Solinsky, Gretchen L. Lowe, Richard B. Wagner, and Vincent A. McGonagle.
Last Updated: November 17, 2008