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Energy Marketer To Pay $1.1 Million Under FERC Settlement

August 31, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

FERC approved a settlement between its Office of Enforcement (Enforcement) and National Energy & Trade, L.P. (National Energy) to resolve an investigation into whether National Energy violated the Commission’s Anti- Manipulation Rule, 18 C.F.R. § 1c.1 (2016), by manipulating physical natural gas prices between January 1, 2011 and September 30, 2015 at the Houston Ship Channel, Tetco M3, Transco Zone 6 (New York), and Henry Hub in order to benefit its related financial positions

National Energy neither admits nor denies the allegations and has agreed to a civil penalty of $1,155,225.91 and disgorgement of $305,780.50.

National Energy neither admits nor denies that its trading violated the Commission’s rules, regulations, or policies

A prior FERC notice concerning the investigation had stated that, among other allegations, "[Enforcement] Staff alleges that National Energy violated 18 C.F.R. § 1c.1 by fraudulently trading physical basis at Texas Eastern M3 (Tetco M3) during the January 2012 bidweek to increase the value of its financial basis position. Specifically, staff alleges that National Energy accomplished this fraud by selling physical basis at Tetco M3 at arbitrarily low prices early in the morning to benefit a large short financial basis position acquired before bidweek, a large part of which it repurchased after making its physical basis sales. Staff also alleges that National Energy violated 18 C.F.R. § 1c.1 by fraudulently trading physical basis at Henry Hub during the April 2014 bidweek to increase the value of its financial exposure. Specifically, staff alleges that National Energy accomplished this fraud by trading physical basis after the close of the NYMEX solely to benefit National Energy’s exposure to the Henry Hub Inside FERC index."

Separately, FERC approved a settlement between the Office of Enforcement and David Silva to resolve an investigation into whether Silva violated the Commission’s Anti-Manipulation Rule, 18 C.F.R. § 1c.1 (2016), by manipulating physical natural gas prices in January 2012 in order to benefit his related financial position

According to FERC's order, Silva is a former employee of NET Midstream, LLC, and other affiliated companies including National Energy & Trade L.P.

Under the settlement, Silva agrees to a one-year ban from participation in any FERC-jurisdictional natural gas markets and to pay a civil penalty of $40,000

Silva neither admits nor denies that his trading violated the Commission’s rules, regulations, or policies.

A prior FERC notice concerning the investigation had stated that, "Staff alleges that Silva violated 18 C.F.R. § 1c.1 by fraudulently trading physical basis at Texas Eastern M3 (Tetco M3) during the January 2012 bidweek to increase the value of his financial basis position. Specifically, staff alleges that Silva accomplished this fraud by selling physical basis at Tetco M3 at arbitrarily low prices early in the morning to benefit a large short financial basis position acquired before bidweek, a large part of which he repurchased after making his physical basis sales."

See these FERC orders for more details

Docket No. IN16-5-000

Docket No. IN16-6-000M

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