SEC asks Allegheny Energy for documents

Utility says it is subject of `informal' investigation

January 24, 2004|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

The Securities and Exchange Commission has requested financial and accounting documents from Allegheny Energy Inc. as part of an "informal" investigation into the utility, the Hagerstown company said yesterday.

Allegheny disclosed the informal probe as part of an SEC filing yesterday in which it reported earnings showing that its loss narrowed to $51 million, or 40 cents per share, in the third quarter of 2003 from $263 million a year earlier.

"We did receive a letter informing us there was an informal investigation the SEC was going to be conducting, and we were asked to provide some documents," said Janice Lantz, an Allegheny spokeswoman. Some of the information requested related to "internal controls," she said.

Lantz said Allegheny provided the SEC with many of the same documents in 2002 when they were requested.

"We intend to cooperate fully with the commission on this investigation," which she characterized as preliminary and "informal," meaning the SEC would be less likely to take any action.

Christopher R. Ellinghaus, with Williams Capital Group LP in New York, said it was more likely that the SEC was continuing to look into issues that had surfaced earlier regarding financial restatements. He said the agency could be looking into matters relating to Daniel Gordon, Merrill Lynch & Co. Inc.'s former chief energy trader, who is charged with inflating earnings at the firm's energy trading unit before its sale to Allegheny for $490 million.

Allegheny sued Merrill last year, alleging that the securities giant overstated the performance of Global Energy Markets and hid the unit's sham trades with Enron Corp.

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