April 22, 2010
San Diego Gas & Electric Company Agrees to Pay a Civil Penalty to Settle CFTC Charge that it Engaged in Wash Sales in the Natural Gas Futures Markets
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an order filing and simultaneously settling charges against San Diego Gas & Electric Company (SDG&E), an investor-owned regulated utility, in San Diego, Calif., for engaging in wash sales of New York Mercantile Exchange (NYMEX) natural gas futures contracts.
SDG&E was ordered to pay an $80,000 civil monetary penalty and agreed to implement procedures that ensure that transactions it makes on U.S. futures markets fully comply with the rules and regulations of those markets, the Commodity Exchange Act and its regulations.
The CFTC order finds that, from January 26, 2006, through February 2, 2006, SDG&E placed market orders through an introducing broker to simultaneously buy and sell natural gas futures contracts. In each instance, SDG&E gave the instruction to place the order to sell and the order to buy the futures contracts for delivery months August through October 2006, on the same phone call, the order finds. Further, the order finds that SDG&E was aware that the introducing broker placed each of the orders with the NYMEX floor brokers together and requested that the prices relevant to each of the buy and sell orders be at or near the same price. The orders were then executed by brokers on the NYMEX trading floor at or about the same price and approximately at the same time. This had the effect of liquidating and immediately re-establishing NYMEX futures contracts previously held by SDG&E.
The CFTC order finds that these transactions constituted prohibited wash sales. The order also recognizes SDG&E’s cooperation in this matter.
The following CFTC Enforcement Division staff members are responsible for this case: Joseph Rosenberg, Steven Ringer, Lenel Hickson and Vincent McGonagle.
Last Updated: April 22, 2010