Barclays fined for fixing US power prices UK bank faces $470m penalty over manipulation The US electricity market’s overseer has slapped Barclays with a record $470m penalty over manipulating power prices, in the latest heavy regulatory sanction against the UK bank. The Federal Energy Regulatory Commission’s fines matched the amount proposed last year when it accused four former Barclays traders of manipulating physical power prices in California and other western US states in order to fraudulently boost financial derivative positions. Barclays intended to fight the order, saying: “We believe that our trading was legitimate and in compliance with applicable law. The Order Assessing Civil Penalty is by its very nature a one-sided document, and does not reflect a balanced and full description of the facts or the applicable legal standard.” The penalty may not be final. The bank and traders chose to forgo a hearing before an administrative law judge, Ferc said. If they do not pay penalties within 30 days, the case will be heard again in a federal court that could make its own findings, lawyers said. The announcement came the same day Barclays appointed a new finance director from JPMorgan Chase in a move to strengthen the investment banking expertise of its senior management team. Tushar Morzaria, chief financial officer at the US bank’s corporate and investment banking arm, will join Barclays in the autumn and take up the role in February, when Chris Lucas is due to retire. Barclays has been working to emerge from a regulatory morass that included £290m paid last summer for manipulating the Libor benchmark interest rate. Ferc, a little-known US regulator, was in 2005 granted enhanced penalty authority of $1m per violation per day and recently brought cases reflecting its muscle. In January it extracted a $1.5m fine from Deutsche Bank over electricity market manipulation. JPMorgan Chase has also been warned of a probable Ferc enforcement action, the bank has acknowledged. The Barclays case involved trading that took place between November 2006 and December 2008, Ferc said. Scott Connelly, the bank’s former head of the US West power desk, was ordered to pay a $15m fine while the other three traders face $1m fines each. An attorney for Mr Connelly declined to comment. Ferc alleged the traders built up large physical index bets that were opposite their position in financial swaps at four different trading nodes. They then traded power for delivery the next day in order to swing the value of swaps up or down, Ferc alleged. “Put simply, respondents 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 index price at a particular point so that Barclays’ financial swap positions at that same trading point would benefit,” the order said. Barclays shares opened 0.4 per cent lower in London at 308.2p. fonte: Gregory Meyer, Sharlene Goff e Patrick Jenkins - Financial Times, 18-07-13
Posted on: Thu, 18 Jul 2013 17:34:24 +0000
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