Minneapolis-based NRG Energy, Inc. has agreed to pay a $2 million civil penalty to settle charges brought by the U.S. Commodity Futures Trading Commission (CFTC). The U.S. District Court for the District of Minnesota entered a consent order on February 15, 2007, resolving the CFTC’s claims that NRG knowingly reported false information regarding natural gas trades.
The case, initially filed on July 1, 2004, alleged that between August 2001 and May 2, 2002, NRG submitted inaccurate data – including manipulated prices and volumes – to Gas Daily, a key energy index reporting service published by Platts. These false reports included trades that were never executed, legitimate trades with altered details, and trades incorrectly dated.
According to the CFTC, market participants rely on indexes like Gas Daily to accurately price and settle commodity transactions. Natural gas futures traders use these published indexes to gauge price discovery and assess risk. By submitting false information, NRG allegedly attempted to distort the market.
The settlement comes after the U.S. Court of Appeals for the Eighth Circuit overturned a prior dismissal of the CFTC’s action on August 4, 2006. The District Court had initially dismissed the case, citing the jurisdiction of the bankruptcy court in the Southern District of New York where NRG had filed for bankruptcy relief. The Appeals Court reversed this decision, allowing the CFTC to pursue its claims.
The CFTC’s investigation was led by staff members Anthony M. Mansfield, Judith Hutchison, Allison Lurton, Laura Gardy, Kim Bruno, Gretchen L. Lowe, Richard B. Wagner, and Vincent A. McGonagle.
Source: CFTC.gov
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