On September 1, FERC issued orders approving separate settlements with National Energy and its former employee David Silva. The settlements involve allegations that National Energy and Silva manipulated natural gas prices at several trading hubs. National Energy agreed to pay a civil penalty of $1.15 million and disgorgement of $305,780. Silva agreed to pay a civil penalty of $40,000 and a one-year ban from trading in FERC-jurisdictional natural gas markets. Considering the fact that National Energy is no longer a going concern, Enforcement recommended a downward departure from its Penalty Guidelines for the penalty against National Energy. National Energy and Silva neither admitted nor denied the allegations.
The settlements resolve FERC Enforcement’s investigations into whether National Energy and Silva manipulated 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 their related financial positions. Enforcement Staff alleged that National Energy and Silva fraudulently traded physical basis at Tetco M3 during the January 2012 bid-week to increase the value of their financial basis positions. According to Staff’s allegations, National Energy and Silva sold physical basis at arbitrarily low prices early in the morning to benefit a large short financial basis position acquired before bid-week, much of which they repurchased after making their physical basis sales. In addition, Staff alleged that National Energy fraudulently traded physical basis at Henry Hub during the April 2014 bid-week to increase the value of its financial exposure, which included trading physical basis after the close of the NYMEX solely to benefit National Energy’s exposure to the Henry Hub Inside FERC index.