Analysts Say SEC Probe Threatens Reliant Spinoff

It's only the first day of summer, but already it's feeling a little sticky for investors in Reliant Energy (REI Quote).

The energy trader has been poised to spin off the rest of its 83%-owned Reliant Resources (RRI Quote) energy marketing unit this summer in a move that would bolster Reliant Energy's balance sheet. The spinoff is vitally important for Reliant as it seeks to placate credit-rating agencies and secure new funding.

But late Thursday, Reliant Resources said the Securities and Exchange Commission had ratcheted up its probe of the company's energy-trading practices to a formal investigation, giving the agency subpoena power and generally raising the case's profile. Analysts and investors said the development could derail the spinoff or at least make it more difficult for Reliant Energy to whip its financials into shape. ...