clock menu more-arrow no yes

Filed under:

El Paso Corp. will pay in trade scandal

HOUSTON — El Paso Corp.'s soon-to-be-scrapped energy trading unit agreed to pay $20 million to settle allegations that traders reported bogus trades to natural gas industry publications that use such information to calculate gas index prices.

The announcement Wednesday from the nation's largest pipeline company came days after El Paso brokered a $1.7 billion settlement with various California entities, including Gov. Gray Davis, to settle lawsuits and investigations into its role in the state's 2000 and 2001 energy crisis.

Under El Paso Merchant Energy's settlement with the Commodity Futures Trading Commission, the company agreed to pay $10 million immediately and the rest over three years. The company admitted no wrongdoing.

"The gas and power markets are vital to the U.S. economy, and the commission, as a market regulator, is committed to maintaining their credibility," said CFTC Commissioner Sharon Brown-Hruska. "This settlement demonstrates that commitment by sending a strong message that fraudulent and manipulative schemes will not be tolerated."

The company said Wednesday it is cooperating with investigations, and "reiterated its previous statement that any inaccurate reporting is unacceptable."

Gregory Mocek, director of CFTC division enforcement, said the settlement with the trading unit, which El Paso announced last year would be disbanded to save money, won't halt ongoing investigations into the parent company "as well as any individuals or corporate officers who may have committed illegal acts."

El Paso and other companies, including Dynegy Inc., the Williams Cos., CMS Energy and American Electric Power Co., unearthed examples of fake data reporting during internal reviews initiated last year.

El Paso disclosed in mid-November the company had found "at least one incident" of fake trade reporting. The day before that announcement, Todd Geiger resigned from El Paso's trading unit, and he was charged in December with wire fraud and reporting false information for reporting 48 fake trades to the Inside FERC's Gas Market Report in November 2001. He has pleaded innocent.