Barclays, US FERC Near Settlement of Market Manipulation Lawsuit

British bank Barclays Plc and the U.S. Federal Energy Regulatory Commission (FERC) made "substantial progress" toward a settlement of FERC's proposed $435 million fine against the bank for alleged power market manipulation, according to court documents.

The Barclays penalty, if there is one, could be the biggest FERC has collected since the Energy Policy Act of 2005 significantly increased the penalties the agency can impose, boosting them up to $1 million per day per violation from a prior cap of $10,000 per day.

The parties did not disclose the terms of the settlement in a so-called minute order filed after a settlement conference at the U.S. District Court in California on Thursday.

The court said the "Parties made substantial progress towards a settlement" and ordered them to file a status report and/or dismissal documents within 45 days.

FERC in 2012 alleged Barclays and its traders manipulated the power market in California from 2006 to 2008, and proposed the bank pay $435 million in civil penalties and disgorge $34.9 million in ill-gotten gains.

The Energy Policy Act of 2005 was in response to market manipulation by numerous energy firms that led to the Western energy crisis of 2000-2001, the bankruptcy of Enron in an accounting scandal in 2001 and the Northeast blackout of 2003 that left some 55 million people in the dark in eight U.S. Northeast and Midwest states and Ontario in Canada.

FERC said on its website it has assessed $693 million in civil penalties since 2007. The biggest penalty since 2007 so far was the $285 million paid by JPMorgan Chase & Co in 2013 to settle FERC's power market manipulation allegations.
Barclays was not immediately available for comment.

 

Reporting by Scott DiSavino