**Release: 4762-03****For Release: March 12, 2003**

**CFTC CHARGES ENRON   WITH PRICE MANIPULATION AND OTHER ILLEGAL ACTS**

**Enron and Former Enron Vice President Charged With Manipulating Prices   in Natural Gas Market; Enron Charged Further With Operating an Illegal,   Undesignated Futures Exchange and Offering Illegal Lumber Futures Contracts   Through Its Internet Trading Platform**

**WASHINGTON, D.C. -** The U.S. Commodity Futures Trading Commission (CFTC)   announced today the filing of a   complaint in federal district   court in Houston, Texas, charging defendants **Enron Corp**. (Enron), an Oregon   Corporation headquartered in Houston, and **Hunter S. Shively** (Shively) of   Houston, Texas, with manipulation or attempted manipulation, and charging Enron with   operating an illegal futures exchange, and trading an illegal, off-exchange   agricultural futures contract.  

    Until its bankruptcy in December 2001, Enron was one of the largest energy   companies in the United States. Its natural gas trading unit was based in   Houston and managed several natural gas over-the-counter (OTC) products.   Enron’s natural gas trading unit was divided into geographical regions   and included a natural gas futures desk. Shively was the desk manager for   Enron’s Central Desk from May 1999 through December 2001.

    From November 1999 through at least December 2001, Enron Online (EOL) was   Enron’s web-based electronic trading platform for wholesale energy,   swaps, and other commodities, including the Henry Hub (HH) natural gas   next-day spot contract that was delivered at the HH natural gas facility in   Louisiana. The HH is the delivery point for the natural gas futures contract   traded on the New York Mercantile Exchange (NYMEX), and prices in the HH   Spot Market are correlated with the NYMEX natural gas futures contract.   During its existence, EOL became a leading platform for natural gas spot and   swaps trading.

    The complaint charges that on July 19, 2001, Shively, through EOL, caused   Enron to purchase an extraordinarily large amount of HH Spot Market natural   gas within a short period of time, causing artificial prices in the HH Spot   Market and impacting the correlated NYMEX natural gas futures price.

    The complaint also charges Enron with operating EOL as an illegal futures   exchange from September through December 2001. According to the complaint,   in September 2001, Enron modified EOL to effectively allow outside users to   post bids and offers. Enron listed at least three swaps on EOL that were   commodity futures contracts. The complaint further alleges that   with this modification, Enron was required to register or designate EOL with   the CFTC or notify the CFTC that EOL was exempt from registration. Enron   failed to do either of these things, and the complaint charges that, because   of this failure, EOL became an illegal futures exchange.

    Finally, the complaint charges Enron with offering an illegal agricultural   futures contract on EOL. According to the complaint, between at least   December 2000 and December 2001, Enron offered a product on EOL it called   the US Financial Lumber Swap. The complaint alleges that the EOL lumber swap   was an agricultural futures contract that was not traded on a designated   exchange or otherwise exempt, and therefore was an illegal agricultural   futures contract.

    The CFTC is seeking against each defendant a permanent injunction, civil   monetary penalties and other remedial and ancillary relief.

    In announcing today’s filing, CFTC Chairman James E. Newsome   commented on the action:  

**“These charges are part of a continuing effort by Commission staff   to police the markets. The Commission’s investigation into Enron is   ongoing, and the Commission continues to aggressively ensure the integrity   of markets over which the Commission has jurisdiction.”**

    Gregory G. Mocek, Director of the CFTC’s Division of Enforcement   noted:  

**“The CFTC is committed to aggressive enforcement of the Commodity   Exchange Act. Today’s filing demonstrates this fact. This is the first   step in addressing Enron’s violative conduct. We will continue to   pursue all other allegations against the company and its employees. I am   very proud of the work of the staff of the Division of Enforcement in   bringing this action today.”**

    The following CFTC Division of Enforcement staff members are responsible   for this case: Gregory G. Mocek, Vincent McGonagle, Susan B. Bovee, Stephen   J. Obie, Lenel Hickson, Jr., David Acevedo, W. Derek Shakabpa, John R.   Velasquez, Jr., David W. MacGregor, Joseph Rosenberg, Gregory Compa and John   J. Cipriani. The Commission would like to thank the Enron Task Force for its   assistance and continuous leadership in cooperative enforcement.

    To see a copy of the complaint, go to the following Internet web   address http://www.cftc.gov/

**Media Case Contact:**    Vincent A. McGonagle    Deputy Director, CFTC Division of Enforcement, Washington, D.C.    (202) 418-5387  

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