Joseph P. Foley, a former Desk Head at American Electric Power Company, Inc. (AEP), has been ordered to pay $350,000 in civil monetary penalties for directing the false reporting of natural gas trades and attempting to manipulate natural gas prices, the U.S. Commodity Futures Trading Commission (CFTC) announced on October 2, 2006. The settlement also permanently bars Foley from engaging in any activity requiring registration with the National Futures Association.
The CFTC’s complaint, originally filed on September 14, 2005 in the U.S. District Court for the Southern District of Ohio, alleged that between November 2000 and September 2002, AEP traders, under Foley’s direction, repeatedly submitted false price and volume information to firms compiling natural gas price indexes, including Platts, a division of McGraw-Hill Companies. The CFTC charged that Foley knowingly directed this false reporting to skew the indexes for financial gain.
“Today’s settlement further demonstrates that false reporting to energy index providers will be discovered, and the culprits will be punished,” stated Gregory Mocek, CFTC Director of Enforcement. “Our enforcement staff’s diligent work over the last four years has led to the investigation and prosecution of dozens of energy traders and companies for false reporting or attempting to manipulate energy indexes.”
This settlement follows a previous agreement with AEP and its subsidiary, AEP Energy Services Inc. (AEPES), in January 2005, where they paid $30 million to settle similar charges of false reporting and attempted manipulation. AEPES also entered into a deferred prosecution agreement with the U.S. Department of Justice, resulting in an additional $30 million criminal penalty. Furthermore, the Federal Energy Regulatory Commission (FERC) secured a $21 million civil penalty from AEP and its subsidiaries related to violations of FERC regulations.
The case was led by CFTC Division of Enforcement staff including Gregory Compa, David W. MacGregor, Lenel Hickson, Jr., Stephen J. Obie, Richard Wagner, and Vincent McGonagle. The settlement was finalized in Washington, D.C.
Source: CFTC.gov
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