MAY 1, 2015
“I dissent from today’s order for two primary reasons. Most important,
my decision is based on my belief that Enforcement Staff failed to meet its burden
of proof. A second matter relates to the nature of the Commission’s decision regarding
individual culpability in this case.
“While Enforcement Staff presents a plausible theory of its case,
I am unable to support today’s decision given the evidentiary record before us and
the relatively high burden placed on staff to prove its case. In a market manipulation
case such as the one before us, Enforcement Staff bears the burden of proving by
a preponderance of the evidence that the respondent intended to engage in a deceptive
course of business.
“In past enforcement cases in which I have supported moving forward
against a respondent, there has been little doubt in my mind that Enforcement Staff
met its burden. In those cases, a record was developed that established clear intent
and actions, and no plausible business explanation for the respondent’s behavior.
Often, contemporaneous electronic messages have further corroborated staff’s theory
of the case.
“This case is materially different. While I do not discount the
evidence that casts Maxim’s behavior in a suspicious light, I cannot set aside the
following undisputed facts in the record:
Gas pipeline restrictions were in place during the time in question.
When asked by the Independent Market Monitor about Maxim’s supply
offers, Mr. Mitton responded that Maxim was bidding “conservatively.” This could
have easily been interpreted by the Independent Market Monitor as a truthful response
acknowledging that while the Pittsfield plant was typically burning gas, Maxim was
offering in on oil as a way to play it safe given pipeline restrictions. This is
not, on its face, an implausible business reason for structuring a supply offer in such
a way. Yet, the Independent Market Monitor did not, at that time, follow-up with
the next logical question, “What fuel are you burning in real time?” Rather, the
Independent Market Monitor seemed satisfied to simply have a copy of the posted
pipeline restrictions.
Approximately one month later, when the Independent Market Monitor
did ask what fuel Pittsfield actually used, Maxim provided a truthful response.
Upon receiving that information, the Independent Market Monitor
was able to mitigate Maxim prior to settlement.
“Staff’s case linking Maxim’s supply offers to a willful intent
to deceive the Independent Market Monitor thus rests on the notion that while Mr.
Mitton’s responses may have been technically correct and ultimately truthful, Mr.
Mitton did not anticipate what information the Independent Market Monitor was really
seeking and therefore his responses were too narrow and not as forthcoming as they
should have been.
“A second matter relates to the Commission’s decision to
penalize and hold accountable just one individual. The record clearly
established that this bidding strategy was condoned and approved by management
at Maxim.
1 Even in the event that I had found that Enforcement Staff
had met its overall burden in the case, I could not support holding only the
front-line employee culpable when management itself embraces and takes
ownership of the actions. To be clear, I find that there are circumstances in
which it can be appropriate to hold individuals accountable in these types of
cases, and I have supported efforts to do so in the past. There may be cases
where a rogue front-line employee concocts a manipulative scheme without
management’s active participation and blessing. However, this is not the case
here. When we find individual liability appropriate, as a matter of fairness,
we should strive to ensure that all those who carried out a scheme are held
accountable, including superiors who knew of and authorized the actions.
“For these reasons, I respectfully dissent.”