For Immediate Release
Kate Fried, Food & Water Watch, (202) 683-2500, kfried(at)fwwatch(dot)org.
Food & Water Watch Calls On CFTC to Investigate Chesapeake Energy CEO’s Shady Holdings
WASHINGTON - Following revelations that Chesapeake Energy CEO Aubrey McClendon also ran a lucrative $200 million hedge fund (Heritage Management Company LLC), which traded in the same commodities Chesapeake produces, the national consumer advocacy organization Food & Water Watch today asked the U.S. Commodity Futures Trading Commission (CTFC) to launch a formal investigation into possible market manipulation by these intertwined interests.
“The Chesapeake-Heritage case highlights why strong safeguards are needed to prevent manipulation and excess speculation in commodity markets,” said Food & Water Watch Executive Director Wenonah Hauter. “Even though cases like this continue to emerge, the House Republicans are slashing the CFTC budget and trying to roll back protections in Dodd-Frank that would have prevented these types of self-dealing market manipulations in the first place.”
In a letter released today to CTFC Chairman Gary Gensler and Commissioners Jill Sommers, Bart Chilton, Scott D. O’Malia and Mark Wetjen, Food & Water Watch Executive Director Wenonah Hauter pointed out that Heritage’s commodity trading between 2004 and 2008 coincided with unusually volatile natural gas prices. The daily communications between the CEO and Chairman of a major natural gas producer and a commodity trading hedge fund creates the potential for price distorting market manipulation. Hauter writes in the letter:
Further, the strong ties between Heritage and Chesapeake raise concerns over market manipulation. McClendon communicated with Heritage on a daily basis, according to media reports, and possessed unique, detailed information related to natural gas production, future marketings, and other industry information that can have significant impact on prices.
McClendon was recently stripped of his chairman title after it was revealed that major financial backers of Chesapeake issued personal loans to McClendon in order for him to take personal stakes in the company’s wells. Chesapeake Energy is the second largest producer of natural gas in the United States, and the most active driller of new natural gas wells, according to its March 2012 investor presentation.
Food & Water Watch is a nonprofit consumer organization that works to ensure clean water and safe food. We challenge the corporate control and abuse of our food and water resources by empowering people to take action and by transforming the public consciousness about what we eat and drink.