Reliant Resources Confirms It Was Subpoenaed
Energy trader Reliant Resources Inc. said U.S. prosecutors have subpoenaed the company for documents pertaining to certain “trading activities that have been the subject of recent publicity,” as the investigation into sham energy trades deepens.
Reliant Resources, based in Houston, on Saturday confirmed it had received the subpoenas, shortly after Dynegy Inc. said it also had received subpoenas for documents relating to certain trades. Reliant Resources, Dynegy and CMS Energy Corp. have admitted to conducting profitless bogus trades designed to boost trading volumes and pump up business.
Reliant said it was cooperating fully with the requests.
On Tuesday, Reliant Energy Inc., which owns 83% of Reliant Resources, said both companies have restated revenue for the first quarter of 2001.
They also plan to reissue consolidated financial statements for 1999, 2000 and 2001 to correct for the sham trades.
Reliant Resources has admitted that it was the subject of a probe by the Securities and Exchange Commission.
Reliant represents the newest chapter in the saga of scandals, beginning with the collapse of Enron Corp., that continue to riddle the energy sector, sending prices of utilities shares lower.
Although Reliant did not disclose which U.S. attorney’s office issued the subpoenas, Houston-based Dynegy on Friday announced that the U.S. attorney’s office in Houston subpoenaed documents concerning trades with Dearborn, Mich.-based CMS.
A representative from Reliant Resources could not be reached immediately for comment.
The company has said the sham, or “wash,” trades boosted revenue by 10% during a three-year period as the companies bought and sold power at the same price with the same counterparts.
The admission has led to the resignations of high-level executives at Reliant Resources and CMS.
Since the scandal began unfolding, analysts have downgraded shares of Reliant Energy and Reliant Resources, their credit ratings have been cut, and shareholder lawsuits have mushroomed.
Shares of Reliant Resources closed Friday at $10.25, up 98 cents on the New York Stock Exchange. Its 52-week high was $37.50; its low was $7.28.
