California utility pays $80,000 penalty for US natgas wash trades

22 April 2010 21:14  [Source: ICIS news]

HOUSTON (ICIS news)--California utility San Diego Gas & Electric (SDG&E) has agreed to pay an $80,000 (€60,000) penalty for engaging in so-called wash trades in NYMEX natural gas futures in 2006, the US Commodity Futures Trading Commission (CFTC) said on Thursday.

Between 26 January and 2 February of 2006, SDG&E had placed simultaneous buy and sell orders with the same broker, requesting that the prices for both purchases and sales be at the same price or close to it, the regulator said.

The utility placed the orders with the aim of creating liquidity in forward-month August, September and October contracts in which SDG&E already held a position, the CFTC said.

The company, which is owned by San Diego-based utility and liquefied natural gas (LNG) company Sempra Energy, had co-operated in the investigation and agreed to ensure that its trading activities fully comply with regulations, the CFTC said.

In January, two Canadian limited partnerships and the broking arm of Bank of Nova Scotia agreed to pay $250,000 each to settle CFTC charges that they had engaged in wash trades in natural gas futures, also in 2006.

The CFTC has levied fines to settle dozens of cases involving irregular energy market trading in the last few years, amid steady pressure from the US Congress, the chemical industry and others to rein in market manipulation.

($1 = €0.75)

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