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US seeks $435M penalty against Barclays over power market trades
The Federal Energy Regulatory Commission (FERC) on Wednesday proposed a $435 million penalty against Barclays Bank PLC for allegedly manipulating electricity markets in and around California between 2006 and 2008.
FERC is also seeking to force Barclays to give up $35 million in profits gained from the allegedly illegal trading, and proposing $18 million in penalties against four individual traders.
FERC, in documents released Wednesday, said its probe discovered numerous instant-messages and emails that reveal the alleged manipulation.
“The [Office of Enforcement] Staff Report alleges that Barclays and the individual traders engaged in a coordinated scheme to manipulate trading at four electricity trading points in the Western United States in certain months from November 2006 to December 2008,” FERC said in proposing the penalties against the bank and the four traders.
The proposed penalty against Barclays would be a record for FERC, according to Bloomberg.
Barclays is vowing to fight the charges. A spokesman told Bloomberg that the bank is “disappointed” with FERC’s action and “strongly disagree[s] with the allegations made by FERC against Barclays and its former traders.”
“We believe that our trading was legitimate and in compliance with applicable law,” spokesman Mark Lane said.
FERC alleges that Barclays used a scheme to manipulate electricity trading markets in a way that would benefit the company’s derivatives positions that were linked to those prices.
“Staff concludes that Barclays and its four individual traders violated the Anti-Manipulation Rule during certain months in the period from November 2006 to December 2008 . . . by engaging in loss-generating trading of next-day fixed-price physical electricity on the IntercontinentalExchange (ICE) to benefit Barclays’ financial swap positions at the primary electricity trading points in the Western United States,” FERC alleges.
