8-KOther Events

ENTERGY CORP /DE/ 8-K Report (Apr 22, 2003)

Filed April 22, 2003For Securities:ETR

Summary

Entergy Corporation (ETR) reported on April 22, 2003, that it has received an informal inquiry from the Securities and Exchange Commission (SEC) concerning "pre-arranged 'round trip' or 'wash' trades" conducted by Entergy, Entergy-Koch, LP, or Entergy-Koch Trading, LP during 2001 and 2002. Concurrently, Entergy and Entergy-Koch Trading are responding to a prior subpoena from the Commodity Futures Trading Commission (CFTC) regarding trading activities of Entergy-Koch Trading and affiliated entities, including the former Entergy Power Marketing Corporation. The company stated its intention to fully cooperate with both regulatory bodies and is conducting internal reviews. Additionally, Entergy-Koch is reviewing trading activities in response to a Federal Energy Regulatory Commission (FERC) staff report that questioned 61 specific trades by Entergy-Koch Trading. While these questioned trades represent a small fraction of overall trading volume and revenues, the reviews are ongoing and the ultimate outcome and timing are uncertain. Investors should note that Entergy accounts for its interest in Entergy-Koch using the equity method, meaning Entergy-Koch's revenues and expenses are not consolidated into Entergy's financial statements, but its share of earnings is included.

Key Highlights

  • 1Entergy Corporation received an informal inquiry from the SEC regarding 'round trip' or 'wash' trades in 2001-2002.
  • 2The company is also responding to a previously announced subpoena from the CFTC concerning trading activities.
  • 3Entergy and Entergy-Koch Trading are cooperating with the SEC and CFTC and conducting internal reviews.
  • 4Entergy-Koch is reviewing 61 trades identified by a FERC staff report, which represent a small portion of its trading activity.
  • 5The company cannot predict the outcome or timing of these ongoing regulatory and internal reviews.
  • 6Entergy accounts for Entergy-Koch using the equity method, meaning its financial results are not fully consolidated.
  • 7Entergy-Koch Trading is a subsidiary of Entergy-Koch, a 50/50 partnership between Entergy Corporation and Koch Energy, Inc.

Frequently Asked Questions

The SEC has inquired about "pre-arranged 'round trip' or 'wash' trades" conducted by Entergy and its affiliates in 2001 and 2002. The CFTC subpoena covers gas and power trading activities of Entergy-Koch Trading and affiliated companies.

The 61 trades questioned by the FERC represent less than one-half of one percent of Entergy-Koch Trading's volume and less than one-tenth of one percent of its revenues for the period under review. However, Entergy accounts for Entergy-Koch using the equity method, so these activities' direct revenues and expenses are not consolidated into Entergy's top-line financial statements.

Entergy-Koch Trading, LP is a wholly owned subsidiary of Entergy-Koch, LP. Entergy-Koch, LP itself is a limited partnership where Entergy Corporation holds a 50 percent ownership stake, and Koch Energy, Inc. holds the other 50 percent.

Entergy Corporation has stated its intention to cooperate fully with both the SEC and the CFTC. Both Entergy and Entergy-Koch Trading are conducting internal reviews to address these matters.