Commodity Futures Trading Commission
Office of External Affairs (202) 418-5080
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581

Release: 5020-04
For Release: November 16, 2004


Agrees to Pay a $3 Million Civil Monetary Penalty to Settle U.S. Commodity Futures Trading Commission Charges

WASHINGTON, D.C. - The U.S. Commodity Futures Trading Commission (CFTC) announced today the issuance of an administrative order filing and simultaneously settling allegations against Cinergy Marketing & Trading, LP (Cinergy), as successor in interest to Cinergy Marketing & Trading, LLC. Cinergy agreed to pay a $3 million civil monetary penalty to settle charges of false reporting of trade information concerning natural gas transactions.
CFTC Finds that Cinergy Falsely Reported Trade Information to Platts Entities Gas Daily and Inside FERC

The CFTC order against Cinergy finds that from at least August 2000 through July 2002, two traders on Cinergy’s natural gas trading desks knowingly reported false, misleading and knowingly inaccurate natural gas trading information, including price and volume information, to Gas Daily and Inside FERC, two price compilers owned by the McGraw Hill company, Platts. According to the order, the reports, which were submitted by e-mail and over the phone, contained both fictitious trades and certain of Cinergy’s actual trades in which the prices and/or volumes were altered, as well as select trades observed in the market, all of which were represented to be Cinergy’s actual trades. The CFTC order finds that, by such conduct, Cinergy engaged in false reporting in violation of the Commodity Exchange Act (CEA).

According to the CFTC order, these price compliers and others use price and volume information in calculating surveys or indexes (indexes) of natural gas prices for various hubs throughout the United States. The order states that participants in the natural gas markets use these indexes to price and settle commodity transactions, and natural gas futures traders refer to the published indexes for price discovery and for assessing price risks. As a consequence, the order continues, the false information reported to reporting firms by Cinergy was market information that affects or tends to affect the price of natural gas in interstate commerce.

In addition to imposing civil penalties, the CFTC order requires the Cinergy to cease and desist from further violations of the CEA and CFTC regulations, and further requires Cinergy to comply with certain undertakings, including providing future cooperation to the CFTC.

Cinergy consented to the entry of the order and its findings without admitting or denying the findings in the order. The order recognizes Cinergy's cooperation in the investigation of this matter.

The CFTC staff responsible for this matter are: Laura Gardy, Michael Otten, Allison Page, William Hoar, Kathleen Banar, Gretchen Lowe, and Richard Wagner.

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Media Contacts
Alan Sobba
(202) 418-5080
Dennis Holden
(202) 418-5088
Office of External Affairs

Staff Contact
Gretchen Lowe, Associate Director
CFTC Division of Enforcement
Washington, DC
(202) 418-5379

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