Fueled with trader communications that included “gonna try to crap on NP light and it should drive the SP light lower” and “fuckked with the Palo mrkt,” the Federal Energy Regulatory Commission (FERC) issued an order to show cause and notice of proposed penalty to Barclays Bank plc and four of its West power desk traders.
The order alleges that the traders manipulated West Coast electricity markets from November 2006 to December 2008, generating a profit of $34.9 million for the bank. FERC is seeking a disgorgement of that profit with interest, along with a civil penalty of $435 million. FERC is seeking an additional $18 million in civil penalties from the four traders involved in the scheme.
FERC estimates that other market participants lost $139.3 million due to the manipulation. In fact, FERC’s investigation was initiated after it received calls on its enforcement hotline from other energy market traders.
Barclays and the four traders have 30 days to respond to FERC’s order demonstrating that they were not in violation of FERC regulations and/or why they should not be assessed penalties in accordance with FERC’s recommendations.
Sources and Coverage:
Issued October 31, 2012 FERC Order to Show Cause and Notice of Proposed Penalty
Issued April 5, 2012 FERC Staff Notice of Alleged Violations
Reuters by Scott DiSavino and Cezary Podkul Barclays Traders Plotted to Rig Power Market
Washington Post/Bloomberg by Brian Wingfield FERC Proposes Record $435 Fine in Barclays Energy Trades
Chicago Tribune/Reuters by Eileen O’Grady and Scott DiSavino Factbox: Biggest Civil Penalties by U.S. Regulator FERC