U.S. authorities report that an energy trading firm has agreed to a deal to avoid possible criminal charges.

Assistant attorney general Alice Fisher of the criminal division, and U.S. attorney Scott Schools of the Northern District of California, announced that Mirant Energy Trading LLC has entered into an agreement resolving an ongoing federal investigation into the submission of knowingly inaccurate reports by former traders of former subsidiary Mirant Americas Energy Marketing LP (MAEM), concerning the natural gas market.

Mirant Energy Trading, a Delaware corporation that is a wholly owned subsidiary of Mirant Corp. and successor to MAEM, will pay a US$11 million penalty to the U.S. Treasury under the terms of the deferred prosecution agreement.

The U.S. Department of Justice (DoJ) said that the firm has accepted and acknowledged responsibility for the actions of MAEM’s former employees, and is required by the agreement to cooperate fully with the government’s investigation. In return, the DoJ has agreed not to file criminal charges stemming from the investigation for a 15-month period due, in part, to the bankruptcy reorganization of the company, the company’s cooperation and the payment of fines.

The DoJ can charge Mirant Energy Trading with delivering knowingly inaccurate reports if it fails to comply fully with the terms of the agreement during that 15-month period.

According to a statement of facts that accompanied the agreement, between February 2000 and December 2000, traders at MAEM’s natural gas trading desks submitted knowingly inaccurate trade data, including fictitious trades, incorrect volumes and/or prices, and incomplete trade reports to industry publications, for the purpose of benefiting MAEM’s natural gas trading positions. Natural gas traders use the published index prices to price and settle certain physical and over-the-counter financial derivative natural gas transactions. Certain MAEM traders also attempted to conceal the false nature of these submissions by providing misleading and inaccurate information to industry publications in response to requests to confirm reported trade information, it says. Mirant management alerted government authorities after discovering the false reporting.

Three former MAEM traders pleaded guilty in the Northern District of California last year to conspiracy to violate the Commodity Exchange Act.

“The Justice Department’s efforts to combat corporate fraud are focused on ensuring honesty and integrity in the marketplace, in this case in the natural gas markets,” said assistant AG Fisher in a release. “This agreement properly recognizes the company’s comprehensive disclosure of violations and its written commitment to deterring illegal conduct in the future. I thank the criminal and antitrust prosecutors who worked on this case, along with agents of the FBI and representatives of the Commodity Futures Trading Commission.”

“The provision of false information by Mirant employees in the natural gas trading markets gave an unfair and illegal advantage to the company and disrupted the appropriate functioning of those markets,” said U.S. attorney Schools. “This deferred prosecution agreement, with an US$11 million fine and a mechanism for future cooperation with authorities, promotes a culture of compliance within the corporation and hopefully deters other corporations from engaging in similar illegal conduct that disrupts essential energy markets.”

Mirant issued a statement saying, “We are pleased to reach this settlement and put behind us matters that happened several years ago, before the company entered and then emerged from bankruptcy. The Department of Justice acknowledges in the deferred prosecution agreement Mirant’s cooperation with the government’s investigation of this matter and the remedial actions Mirant has previously taken, including self reporting the matter to the Department of Justice and to the Commodity Futures Trading Commission.”

It adds that in 2002, Mirant reviewed and amended its external reporting process after industry-wide natural gas reporting problems were identified.