[StBernard] Morgan Stanley subsidiary agrees to $2.3 million settlement with Florida for gouging on gas prices
westley at da-parish.com
Wed Jul 15 09:54:04 EDT 2009
Morgan Stanley subsidiary agrees to $2.3 million settlement with Florida for
gouging on gas prices
By MICHAEL C. BENDER
Palm Beach Post Capital Bureau
Monday, July 13, 2009
TALLAHASSEE - Florida will receive a record $2.3 million settlement from a
Morgan Stanley subsidiary that state officials say unconscionably increased
gas prices during Hurricane Ike last year, state officials announced today.
It's at least the second time the company, TransMontaigne, has been involved
in a price gouging settlement with the state. The company paid $5,000 for
its role in alleged price gouging in Fort Lauderdale and Pensacola in the
aftermath of the Sept. 11 terrorist attacks.
After Ike, in September 2008, the company increased the cost of its gas by
$1.60 per gallon during the storm, bringing prices to over $5 per gallon.
One retailer in Boca Raton, NexStore, shut down its pumps rather increase
its pump prices to $5.20 per gallon.
The deal marks the first time the state has gone after a gas supplier
instead of a retailer and the amount far exceeds any price gouging
settlement the state has won in recent years. Nationally, the amount is
topped by a pair of billion-dollar price gouging settlements California
received, including a $1.5 billion deal Enron in 2005.
"This is the big banana," Attorney General Bill McCollum said.
But it was not clear today whether the settlement exceeded the company's
profits during the alleged price gouging. The exact cost for the state to
negotiate the deal was also not available.
State officials said it probably cost taxpayers "several hundred thousand"
to close the case after eight months. The settlement amount includes
$650,000 for excess profits, but McCollum said that was "the best we could
"I would hate to start telling you all the details that, 'Hey, we asked for
the moon and we got this,' " McCollum said. "We asked for and got the
biggest settlement ever in history and that's probably good enough."
TransMontaigne, a Denver-based petroleum shipper owned by Morgan Stanley
Capital Group Inc., said the prices it set during the storm were based on a
regional market standard known as the Gulf Coast Platts index. The company
did not admit to breaking any state laws, according to the settlement.
"We are pleased to have resolved this issue with the state of Florida,"
Morgan Stanley spokeswoman Jennifer Sala said.
TransMontaigne also agreed to a $5,000 price gouging settlement in South
Carolina on Wednesday.
The state said it has 12 outstanding investigations into gas suppliers
accused of price gouging and the money from the settlement will be used to
fund those cases.
"We could go to court, we could try to get a lot more money if we want to,"
Agriculture Commissioner Charles Bronson said. "But is it worth all the man
power ... when we can come to an agreement as we have in this case?" Morgan
Stanley bought TransMontaigne for a reported $634 million in 2004. Under the
merger, Morgan Stanley purchases gas, which TransMontaigne distributes to
stations throughout the state and country.
Morgan Stanley was featured in a Jan. 11 60 Minutes report that examined the
role of Wall Street speculation in the historic spike in oil prices last
year. Despite miserable economic conditions, the company reported a $1.6
billion annual profit in December.
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