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Texas Power Marketer To Pay $10,000 To Resolve Allegedly "False And Misleading" Financial Statements

May 26, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Tony C. Marsh d/b/a MAMO Enterprises would pay $10,000 under a settlement with Staff of the Public Utility Commission of Texas to resolve Staff's allegations that MAMO Enterprises filed "false and misleading information" as part of financial statement submissions to ERCOT.

At the time of the alleged violations, MAMO Enterprises, a sole proprietorship of Tony C. Marsh, served as a power marketer and QSE.

Effective January 1, 2013, ERCOT Protocol § 16.16.1(1)(c)(ii)(B)(2) imposed a new, and higher, minimum tangible net worth requirement ($500,000) for certain market entities, including QSEs such as MAMO.

Staff alleged that MAMO filed audited and unaudited financial statements with ERCOT that, "were inaccurate and included false and misleading information and an omission of material information on four separate occasions beginning in December 2012 and continuing into 2013."

According to the settlement, "Staff alleges that the problematic assets listed by MAMO in these financial statements include:

"a. a purported accounts receivable balance that Staff does not believe is a true receivable; and

"b. land that was not owned by MAMO."

"By listing these problematic assets, Staff alleges that Mr. Marsh intentionally increased the valuation of MAMO's balance sheet from substantially below the new $500,000 minimum tangible net worth requirement to above it," the settlement states.

The stipulation provides that Mr. Marsh disputes that any of the audited or unaudited financial statements were inaccurate or included false or misleading information or an omission of material information. According to the settlement, Mr. Marsh contends that, as a sole proprietorship, he included certain personal assets in MAMO's financial statements only as needed to satisfy ERCOT's credit requirements, and MAMO's financial statements were compiled for ERCOT purposes only.

On May 9, 2013, MAMO informed ERCOT that MAMO was withdrawing from the ERCOT market and was terminating its market participant agreement with ERCOT, which became effective June 8, 2013

In an effort to compromise and to resolve Staff's investigation of the alleged rule violations, on February 10, 2015, MAMO relinquished its registration as a power marketer in the ERCOT market.

Aside from the $10,000 payment from Mr. Marsh, the settlement provides that neither Mr. Marsh nor MAMO will serve as a "principal" for any entity regulated by the Commission for a period of 10 years from the date of the Commission's order approving the settlement agreement. For the purposes of the agreement, "principal" is defined as an executive officer, partner, owner, director, shareholder of a privately held company, shareholder of a publicly traded company who owns more than 10% of a class of equity securities, or a person that controls the person in question. As long as Mr. Marsh does not fit the definition of principal above, he may serve as an employee of or consultant for any entity regulated by the Commission, including serving as a provider of commodity risk management services as permitted under P.U.C. SUBST. R. 25.107(g)(1)(E), the settlement states

Docket 44757

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