About a dozen former El Paso Corp. traders and their supervisors have been notified they are targets of a grand jury investigation into natural gas price manipulation. The former employees received target letters from the United States Attorney’s office in Houston office advising them that they may face charges of commodity price manipulation, conspiracy and wire fraud.
The charges referred to in the target letters are virtually the same as those previously filed against Todd Geiger, a former El Paso trader who was accused of providing false information to Inside FERC’s Gas Market Report. In December, 2003, Mr. Geiger pleaded guilty to one count or wire fraud and of reporting inaccurate information under the Commodity Exchange Act.
The government’s investigation relates to natural gas price indexes, which various publications produced through surveys of energy traders and others. The indexes offer pricing snapshots for hubs across the country that buyers and sellers of natural gas use to help set prices in contracts. The Commodity Futures Trading Commission has filed civil charges against several companies over the past couple of years in which the CFTC claims that traders knowingly provided false data to publications with the intention of influencing natural gas prices. The CFTC has collected about $250 million in penalties from companies, including $30 million from the Royal Dutch/Shell trading subsidiary, Coral Energy Resources, and $20 million previously from El Paso.