Barclays will contest a record $453 million fine imposed by a US energy regulator against the British bank and four of its power traders, setting up a likely federal court battle. The fines, which were upheld by the Federal Energy Regulatory Commission (FERC) on Tuesday, confirm the top US energy cop will pursue its most ambitious market manipulation case to date.
For Barclays, the sanction is the latest of a series of scandals that include a $450 million fine by US and UK regulators for rigging global benchmark interest rates last year. But unlike its settlement over Libor (London Interbank Offered Rate), where the bank accepted wrongdoing, it has fought the FERC allegations from the start. FERC first proposed the fines in October 2012 over alleged manipulation of Californian and other western power markets by the British bank in the last decade.
Tuesday's ruling said FERC commissioners agreed with earlier findings by regulatory staff, which said the bank deliberately lost money in physical power markets to benefit its financial positions between 2006 and 2008, and that the Barclays traders knew their activity was unlawful. FERC also ordered Barclays to hand back $34.9 million in "unjust profits" to low-income home energy assistance programs in Arizona, California, Oregon and Washington to benefit electricity customers there.
"We have co-operated fully with the FERC investigation," Barclays spokesman Marc Hazelton said in a statement on Tuesday. "We intend to vigorously defend this matter." The case will likely now move to a federal court. The bank said on Wednesday it believed its trading "was legitimate and in compliance with applicable law" and the penalty assessed by FERC is without basis. Barclays Chief Executive Antony Jenkins, who took the helm last year, is trying to rebuild the bank's battered reputation and repair testy relationships with regulators.
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