Ex-natgas traders guilty of price manipulation
HOUSTON (Reuters) - Three former El Paso Corp <EP.N> natural gas traders were convicted on Thursday of reporting false deals to manipulate gas prices from 2000 to 2002.
A U.S. federal court jury convicted James Brooks, Wesley Walton and James Patrick Phillips of sending publications Inside FERC and NGI false trade data to defraud the markets.
U.S. District Judge Melinda Harmon scheduled sentencing for May 23.
The men face up to five years in prison and $250,000 fines on the one conspiracy count of which each was convicted.
Each man also could receive up to five years in prison on each false reporting and wire fraud count of which he was convicted - 44 for Brooks, 22 for Walton and 20 for Phillips.
In addition, they face up to $250,000 in fines, or twice the financial loss caused, for each wire fraud count and $500,000 in fines on the false reporting counts.
"It's a victory for the integrity of the marketplace," Assistant U.S. Attorney Belinda Beek said.
"There will be an appeal. We think there are several issues," said attorney David Adler, who represented Phillips.
Brooks, who was the boss of the trading operation, was convicted on 45 of 49 counts in the indictment, trader Walton 23 counts and trader Phillips 21.
Prosecutors argued that defendants' intent was to defraud other buyers and sellers to enhance the profits of their trading operation at El Paso.
Defense lawyers argued that, while e-mails and other evidence made defendants look bad, the reporting system was flawed and defendants had no criminal intent.
According to the indictment, the three conspired to send fictitious price and volume reports on trades to the newsletters, which publish indexes widely used to price gas.
Since the market manipulation was uncovered, laws and systems have changed to limit trader ability to influence prices.
(Reporting by Bruce Nichols; Editing by Christian Wiessner)