By Ted Caddell
The Gates brothers have returned to their battle stations.
In October, hedge fund twins Rich and Kevin Gates stopped talking to the press and pulled down a website detailing their battle against the Federal Energy Regulatory Commission Office of Enforcement — a sign many saw as an indication that they were seeking a settlement over FERC market manipulation allegations.
Yesterday, the site was back up again. The decision to reactivate the site was spurred, according to Kevin Gates, by a Dec. 5 notice that FERC is about to move on to the next step — civil prosecution.
“We were hoping to move on with our lives and focus on other matters” when they decided to deactivate their website in October, Gates said Monday. “Then we got this letter, which seems to suggest that FERC would not let us move on.”
Gates steadfastly denied that any settlement with FERC was ever in the works. “There were never any settlement discussions,” he said. “We were just tired, and wanted to get on with our lives.”
The letter from FERC attorney Steven C. Tabackman indicated that the agency would make a public release about the investigation sometime after Dec. 10.
Gates is convinced it is going to be an order to show cause.
An order to show cause is the probable next step in the enforcement process, announcing a formal proceeding against the subject of an investigation, according to the FERC website explaining its enforcement process.
In August, the day after Bay was sworn in as commissioner, FERC staff issued a notice of alleged violations accusing the brothers and their partners in Powhatan Energy Fund of engaging in “manipulative” up-to-congestion trades in PJM in 2010. (See PJM UTC Case Likely Headed to Court After FERC Notice.)
At the time, Kevin Gates vowed to fight on.
On Oct. 21, FERC issued a notice that Commissioner Norman Bay was recusing himself from the Powhatan case. Bay headed up the FERC enforcement office when the investigation started. Shortly after that notice was published, the Gates brothers took down their site.