Former Reliant Electricity Trader Agrees to $25,000 Fine

A former Reliant Resources Inc. electricity trader agreed Monday to pay $25,000 to settle allegations that he participated in illegal trades during the California energy crisis, commodities regulators said.

On five occasions from April to June 2000, Joseph Knauth Jr. executed illegal “wash” trades, the Commodity Futures Trading Commission said.

Knauth offset trades he made on an electronic platform with trades of equal value over the telephone, the commission said.

The trades were posted on the electronic trading platform, resulting in a second allegation of reporting false prices, Michael Solinsky, the commission’s chief trial attorney, said.

In addition to paying the fine, Knauth agreed to cooperate with the commission in its investigation of power market manipulation.

Knauth neither admitted nor denied the commission’s findings.

Reliant, now Reliant Energy Inc., last year agreed to pay an $18-million fine to settle commission charges of attempted manipulation of natural gas prices, including prearranged wash trades.

The commission said traders on Reliant’s Western power-trading desk arranged seven round-trip trades in which the same 25 megawatts of electricity were bought and sold at an identical price.

Last month the Justice Department brought the first criminal charges against a company for misconduct during the California energy crisis when it accused a Reliant subsidiary of unlawfully forcing up prices in June 2000.

Shares of Houston-based Reliant fell 32 cents to $8.18 on the New York Stock Exchange.