FERC-Barclays deal cuts fine 80% for alleged trading scheme

Source: Sam Mintz, E&E News reporter • Posted: Thursday, November 9, 2017

Barclays bank in New York. Photo credit: Deadly437/Wikipedia

The Federal Energy Regulatory Commission announced a deal with British bank Barclays PLC to reduce a record fine. Deadly437/Wikip

The Federal Energy Regulatory Commission announced a deal with the British bank Barclays PLC yesterday to reduce a record fine for allegedly manipulating Western electricity markets by almost 80 percent.

The regulatory agency in 2011 accused the bank and four of its traders of taking part in a “coordinated scheme” including trades in day-ahead fixed-price physical electricity, allegedly costing power buyers and sellers $139.3 million.

FERC said at the time that the traders were willing to accept losses in the day-ahead power markets in order to benefit the bank’s financial swap positions on the Intercontinental Exchange.

In 2012, FERC issued a $469.9 million fine against Barclays and its former traders, the highest penalty the agency has ever proposed. The bank has denied wrongdoing, and the fine has been the subject of an ongoing court battle between the agency and the bank (Greenwire, May 21, 2015).

Yesterday, FERC announced it had reached a settlement with Barclays to reduce the fine to $105 million: a $70 million civil penalty payment to the U.S. Treasury and $35 million in disgorgement funds, which will go to the Low Income Home Energy Assistance Program in four states.

As part of the agreement, Barclays does not admit or deny that the company or the traders violated the Federal Power Act or FERC’s Anti-Manipulation Rule.

A FERC spokeswoman said the agency had no comment beyond the settlement notice.

The decision did not sit well with one consumer advocate.

Tyson Slocum, energy program manager at the watchdog group Public Citizen, called the new fine a “slap on the wrist.”

“FERC’s enforcement staff … found that Barclays’ manipulation cost market participants and consumers much more than Barclays is paying,” he said in a statement. “FERC’s action is an outrage and sends a clear signal to market manipulators: Crime will now pay.”