Barclays, Traders Fined $487.9 Million by U.S. Regulator

Barclays, Traders Fined $487.9 Million in U.S. Energy Probe
A logo hangs outside the headquarters of Barclays Plc in the Canary Wharf business district of London. Photographer: Simon Dawson/Bloomberg

Barclays Plc and four of its former traders must pay a combined $487.9 million in fines and penalties, the U.S. Federal Energy Regulatory Commission said in a final order stemming from its investigation of alleged manipulation of energy markets.

The agency directed the company and the traders to pay to the U.S. Treasury within 30 days $453 million in civil penalties, according to an 86-page order issued today. The London-based bank must also give up $34.9 million in profits, to be distributed to programs that help low-income homeowners pay energy bills in California, Arizona, Oregon and Washington, it said.

“If Barclays and the traders do not pay the penalties assessed by FERC, then FERC may seek affirmation of the penalties from a federal district court,” the agency said today in a statement.

The penalties, which the agency first proposed Oct. 31, stem from an investigation that is part of the FERC’s crackdown on market manipulation. Since the beginning of 2011, the agency has made public at least 13 probes of energy-market gaming, including investigations of trading units at Deutsche Bank AG and JPMorgan Chase & Co.

“We believe that our trading was legitimate and in compliance with applicable law,” Barclays spokesman Marc Hazelton said today in a statement. “We intend to vigorously defend this matter.”

‘One Sided’

He said the bank believes the penalty is without basis and that the FERC order is a “one-sided document, and does not reflect a balanced and full description of the facts or the applicable legal standard.”

The FERC determined that the Barclays traders manipulated markets in the Western U.S. from November 2006 and December 2008, by taking losses in power markets in order to boost financial positions.

“FERC finds that their actions demonstrate an affirmative, coordinated and intentional effort to carry out a manipulative scheme,” violating U.S. law and FERC rules, according to the agency’s statement.

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