US seeks $435M penalty against Barclays over power market trades

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The commission is giving the company and the traders 30 days to demonstrate why they should not be assessed the penalties. FERC alleges the London-based company’s alleged manipulation caused $139 million in losses to participants in the western electricity trading markets.

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.