NEW YORK (CNN/Money) -
The Securities and Exchange Commission has subpoenaed Citigroup Inc. over its role in a controversial natural-gas transaction that made energy trader Dynegy Inc.'s finances look better than they actually were, according to a report Friday.
The subpoena is part of a wide-ranging investigation the SEC is conducting into the Houston energy company. The agency wants to question Citigroup about its role in Project Alpha, which the financial services firm helped arrange for Dynegy last year, the Wall Street Journal reported. Citigroup provided $300 million in financing for the project. It remains unclear whether Citigroup is a target of the investigation or is simply being asked for information.
Representatives of Citigroup and the SEC declined comment to the Journal Thursday. A Dynegy spokesman said only that the company is cooperating fully with investigations into its practices.
Citigroup's subpoena further illustrates how financial services firms are being caught up in the energy industry's troubles, the paper said. Regulators have targeted such firms, including Citigroup, for their involvement with the collapse of Enron Corp.
The SEC and the U.S. attorney's office in Houston are investigating whether critics' claims that Project Alpha served no purpose other than to boost Dynegy's reported cash flow and reduce its tax burden, the Journal reported. Dynegy said the transaction ensured a stable gas supply source.
Shares of Citigroup (C: Research, Estimates) slipped 16 cents to $43.34 Thursday. Dynegy's (DYN: Research, Estimates) shares increased 33 cents to $8.75.