This Southern District U.S. Attorney Office press release announces that two former gas traders — former Dynegy trader Michelle Valencia and former El Paso trader Greg Singleton — had counts added to their pending indictments in connection with a series of criminal cases in which the government alleges that the traders reported bogus trades to industry newsletters to affect the price of natural gas. Here is a previous post on Ms. Valencia’s case and other posts on the gas trader prosecutions may be reviewed here, here, here, here, here and here.
These particular trader cases involve alleged efforts to manipulate the trading indexes, which are used to value billions of dollars in gas contracts and derivatives. Industry publications, such as Inside FERC Gas Market Report, use data from traders to calculate the index price of natural gas. Accordingly, movement in index prices often affects the level of profits that traders can generate. In these particular cases, it remains unclear in what context the allegedly false information was provided or whether the publication actually used any such false information. However, the government is contending that it needs only to prove that fake trades were reported to the publications and not that the trades were actually published or affected the markets.
Ms. Valencia and Mr. Singleton were originally charged with “conspiracy, false reporting, and wire fraud related to the transmission of allegedly inaccurate trade reports to industry newsletters which used the reported trades to calculate the ‘index’ price of natural gas in August 2000,” and the superseding indictment adds “additional counts of false reporting and wire fraud relating to inaccurate trade reports used to calculate the ‘index’ price of natural gas in July 2000.”
As noted in this previous post, it would appear that this is a fairly transparent effort by the government to increase the alleged market loss attributable to the alleged false reporting for purposes of seeking longer jail terms against Ms. Valencia and Mr. Singleton. Justice Department lawyers have been making some fairly preposterous positions on that particular issue in other cases recently.