Oct 10 (Reuters) - U.S. federal energy regulators said on
Thursday they filed a lawsuit in the U.S. Eastern District Court
in California against British bank Barclays Plc to
recover $435 million in civil penalties for alleged power market
Although the U.S. Federal Energy Regulatory Commission
(FERC) sought a jury trial, the regulator said the court can
affirm the FERC's July 16 order assessing civil penalties
against the bank and four former traders.
The FERC filing alleged that Barclays and its traders
engaged in a "fraudulent scheme to manipulate electricity
prices" in and around California between 2006 and 2008.
Basically, the FERC accused Barclays of losing money on
physical power trades to benefit its financial positions.
In response to the lawsuit, Barclays said: "We strongly
disagree with the allegations made by FERC against Barclays and
its former traders in the FERC's petition, and we believe the
penalty previously assessed by the FERC is without basis.
"We intend to vigorously defend this matter in federal
court, where the FERC will have the burden of proving its
allegations and we will be able to present a balanced and full
presentation of the facts."
The FERC said its Office of Enforcement started
investigating the bank's trading in 2007 following multiple
calls to the Commission's Enforcement Hotline.
In October 2012, the FERC issued a so-called show cause
order requiring the bank and traders to show why they should not
be found to have violated the law and fined.
The bank and the traders elected in November 2012 not to
have an administrative hearing at the FERC and instead chose to
have the case heard in federal district court.
After waiting the legally required 60 days after the
Commission affirmed the penalty against the bank in July 2013,
the FERC filed the lawsuit in federal district court on
PAST FERC FINES
The FERC has issued over $1 billion in fines since the
Energy Policy Act of 2005 significantly increased the penalty
the commission can impose to $1 million per day per violation
from the previous cap of $10,000 a day.
The FERC imposed the biggest fines on Barclays, JPMorgan
Chase & Co Inc and Constellation Energy over allegations
of power market manipulation. Energy trader Brian Hunter and BP
Plc were fined over allegations of natural gas market
manipulation, and Florida power companies fined over alleged
violations of power reliability standards leading to a blackout.
Constellation is now a unit of Exelon Corp.
BP said it will defend the company against the FERC
Earlier in 2013, Hunter successfully defended himself
against the FERC allegations in federal court. The U.S. Court of
Appeals for the District of Columbia Circuit ruled that the
Commodity Futures Trading Commission (CFTC) and not the FERC
have the authority to fine him. The CFTC is expected to pursue a
case against Hunter in federal court in November.