S&P concerned about dismissal of Allegheny Energy trader

Sept. 6, 2002 — Allegheny Energy Inc. (BBB/Negative/A-3) announced on Thursday that its former head trader, Dan Gordon, had violated the company’s conflict of interest policies and that his employment with the company was subsequently terminated.

Standard & Poor’s said that the development bears negatively on Allegheny’s credit profile because of the potential for additional discoveries of improprieties as the internal investigation continues.

Nevertheless, S&P will not take a rating action at this point because, according to the current level of disclosure provided by the company, the number of transactions involved is small.

Allegheny does not believe these transactions will require any adjustment to reported financial results or have any significant adverse impact on future results.

However, Allegheny could be downgraded if this issue proves to be more serious, or have a wider implication on financial results.

SOURCE: Standard & Poor’s

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