Energy traders battered by falling stock prices. (News).(Brief Article)

NEW YORK, NY--Rocked by trading scandals and questionable accounting, energy company stocks have fallen precipitously and the wholesale energy trading business has been devastated. Shares in energy trading firms collapsed in July amid concerns some companies might not survive without bankruptcy protection.

Banc of America Securities announced that it had lowered its investment ratings on 11 wholesale energy companies, according to a Reuters news story on July 23.

"Although we downgraded the sector at year end, we did not go far enough as we misjudged the snowball effect of Enron," Banc of America said, calling investments in the sector "dead money for the foreseeable future."

Dynegy Inc., which just months ago was primed to become the top U.S. energy trader, saw its viability cast in doubt after its stock dropped more than 60%. The company, which in November attempted to take over Enron before it filed for bankruptcy, said it expected cash flow in 2002 to range from $600 million to $700 million, down from a previous estimate of $1 billion.

Some industry observers raised the possibility that Dynegy could be forced into bankruptcy protection unless its largest shareholder, ChevronTexaco Corp., provides cash or other help. But ChevronTexaco "has shown no interest in putting more money into this morass," according to CreditSights, an independent credit research firm, quoted in the Houston Chronicle.

A Dynegy spokesman said the firm was financially viable and that it was not considering a bankruptcy filing.

Shares of Williams Cos. plunged 61% after the credit-pinched company said it expects a large second quarter loss and would slash its stock dividend by 95% to save cash. One rating ...