Former trader admits to manipulating natural gas prices during California energy crisis

By Julia Cheever, Bay City News Service

June 10, 2006

SAN FRANCISCO (BCN) - A former trader with Oklahoma-based Williams Power Co. pleaded guilty in federal court in San Francisco yesterday to participating in a conspiracy to manipulate natural gas prices between 1998 and 2002.

The time period of the manipulation admitted to by Daryl Brown, 36, of Oklahoma, includes the era of California's energy crisis in 2000 and 2001.

U.S. Attorney Kevin Ryan said Brown admitted during the plea that he conspired with others to report fictitious trades to two industry newsletters.

The fictitious reports had the effect of manipulating published index prices and thus increasing the profits of Williams Power Co.'s sales.

Ryan said, "Mr. Brown admitted that approximately 75 percent of the trades he reported to industry newsletters were deliberately fabricated.

These false data skewed published prices so the company could illegally profit."

Brown, who agreed to cooperate in an ongoing probe of natural gas price manipulation, will be sentenced by Illston on Sept. 22.

Brown is the third former Williams trader to plead guilty to similar charges since 2004.

In a separate agreement reached with the Justice Department in February, Williams Power Co. promised to pay a $50 million penalty to the U.S. Treasury, took responsibility for its employees' actions and pledged to cooperate in the investigation.

Under that pact, known as a deferred prosecution agreement, the Justice Department will not file criminal charges against the company during a 15-month period if Williams complies with the terms of the agreement during that time.

Williams Power Co., formerly known as Williams Energy Marketing & Trading Co., is a subsidiary of The Williams Companies, based in Tulsa, Okla.

Ryan said, "This continuing investigation should send a message to traders and companies that they can be held criminally accountable for illegally manipulating data."

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