Enron Corp. has agreed to pay $35 million in a settlement with the Commodity Futures Trading Commission over allegations it sought to illegally manipulate natural gas prices in its trading practices.
But the penalty announced Wednesday will go to the back of the line behind thousands of the bankrupt company’s other creditors — meaning the agency won’t be paid.
If U.S. Bankruptcy Judge Arthur Gonzalez approves the proposed settlement as expected, Enron will join more than a dozen energy companies and their partners or subsidiaries that have settled CFTC allegations of false price reporting, attempted manipulation or both.
Those companies have ponied up a collective $180 million. They include Dynegy Inc., The Williams Cos.; Duke Energy subsidiary Duke Energy Trading and Marketing; El Paso Corp. subsidiary El Paso Merchant Energy; Oneok Inc.; Calpine Corp.; two CMS Energy subsidiaries; and Reliant Energy Inc. subsidiary Reliant Energy Services.
Like Houston-based Enron, those companies neither admitted nor denied wrongdoing in relation to the settlements.
“We are pleased to be putting this litigation behind us as part of our ongoing effort to move forward with Enron’s bankruptcy proceedings,” Enron spokeswoman Karen Denne said.
Gregory Mocek, director of the CFTC’s enforcement division, declined comment on the proposed deal.
The CFTC’s pursuit of Enron began when the agency filed a civil complaint in March last year accusing the company and a former vice president, Hunter Shively, of operating the Enron Online Internet trading platform as “an illegal futures exchange” and cited alleged attempts to manipulate the natural gas market. The CFTC also alleged Enron tried to offer an illegal agricultural futures contract involving a lumber deal.
On June 3, Gonzalez will consider confirmation of Enron’s plan to emerge from bankruptcy as two companies with different names — one domestic, the other international — that will have Enron’s pipeline and power assets.
The CFTC’s complaint against Shively remains active.
The agency’s only other pending complaint against a company charges American Electric Power Co. Inc. and its subsidiary, AEP Energy Services Inc., with false reporting and attempted manipulation.
AEP spokeswoman Melissa McHenry said the company discovered some of its employees had provided false information to trade publications and reported its findings to the CFTC. The company is continuing to work toward a resolution with the agency, McHenry said.
Enron imploded in December 2001 amid revelations of hidden debt and inflated profits that sent investors fleeing and shattered the company’s credibility on Wall Street. Twenty-eight people, including former CEO Jeffrey Skilling, have been indicted on charges stemming from the Justice Department’s ongoing probe.
