Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FERC orders Barclays to pay $435 million in civil penalties for manipulating electric energy prices, (Jul 17, 2013)

By Jeffrey May, J.D.

Global financial services provider Barclays plc has been ordered to pay $435 million in penalties by the Federal Energy Regulatory Commission (FERC) for manipulating electric energy prices in California and other western markets between November 2006 and December 2008. FERC also announced today that Barclays was ordered to disgorge $34.9 million in unjust profits and that four Barclays traders were ordered to pay millions in civil penalties.

The company and its traders violated FERC’s Anti-Manipulation Rule from November 2006 to December 2008 by manipulating the energy markets in and around California through the use of a coordinated, fraudulent scheme, according to an agency order. According to FERC, the company and its traders engaged in this unlawful manipulation scheme with the intent to commit fraud.

FERC concluded that Barclays and its traders traded fixed price products not in an attempt to profit from the relationship between the market fundamentals of supply and demand, but instead for the fraudulent purpose of moving the daily index price (representing a daily volume-weighted average of prices paid for the fixed-price trades conducted each day) at a particular point so that Barclays’ financial swap positions at that same trading point would benefit.

The traders named by FERC are: Daniel Brin, Scott Connelly, Karen Levine, and Ryan Smith. Connelly was ordered to pay $15 million, and the others were ordered to pay $1 million each.

The civil penalties must be paid within 30 days. If Barclays and the traders do not pay the penalties assessed by FERC, then FERC may seek affirmation of the penalties from a federal district court.

Barclays has announced its intention not to pay the penalties and to refute FERC's determination in court.

Companies: Barclays plc

News: Antitrust