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FERC’s Continued Pursuit Of Individual Trader Liability

FERC’s Continued Pursuit Of Individual Trader Liability

Full Title: FERC's Continued Pursuit Of Individual Trader Liability
Author(s): David A. Applebaum, Todd L. Brecher
Publisher(s): Akin Group
Publication Date: September 1, 2016
Full Text: Download Resource
Description (excerpt):

Law360, New York (September 8, 2016, 1:02 PM ET) — On Sept. 1, 2016, the Federal Energy Regulatory Commission issued
an order approving a settlement between its Office of Enforcement (OE) and National Energy & Trade LP (NET), resolving its investigation into NET’s alleged manipulation of natural gas prices through bidweek trading at Tetco M3 and Henry Hub in order to benefit related financial positions.

On the same day, the commission also issued an order approving a settlement between the OE and David Silva, an NET trader, based on Silva’s involvement in the Tetco M3 trading at issue. Through the settlements, NET — which wound down its operations in 2015 — agreed to pay a civil penalty of approximately $1.15 million and to disgorge approximately $300,000 in unjust profits, while Silva agreed to pay a civil penalty of $40,000.[1]

The NET and Silva settlements involve similar allegations to those that the OE has made in other enforcement cases involving natural gas trading (i.e., manipulative bidweek trading to influence the value of financial positions), reflecting the agency’s
continued focus on “related-position” cases. The Silva settlement also reflects FERC’s continued focus on pursuing liability (both civil penalties and trader bans) for individual traders — a trend that is unlikely to abate in light of several recent federal court decisions upholding FERC’s authority to pursue individual liability. But, apart from reflecting these core FERC enforcement trends, these settlements are notable for additional reasons.

One is that the NET settlement reflects a rare instance in which FERC has approved a downward departure from its penalty guidelines, and it appears to be the first such departure in a market manipulation case. Another is that these settlements show the persistence with which FERC will pursue even relatively small manipulation cases — even when the case involves a co

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