Barclays Plc, facing a $488 million fine for allegedly gaming U.S. energy markets, seeks to delay a U.S. lawsuit to enforce the penalty until a judge decides whether the bank did anything wrong.
Barclays, the U.K.’s second-largest bank by assets, was sued by the Federal Energy Regulatory Commission for failing to pay the fine 60 days after it was imposed. Barclays and four former traders from 2006 to 2008 manipulated trades on contracts to deliver physical electricity in western U.S. power markets with the intent of moving an index to benefit the bank’s other bets on financial swaps, FERC alleged.
Barclays denies wrongdoing and claims FERC can’t ask a judge to enforce the fine until the bank has a chance to challenge the agency’s decision to issue the penalty, made after an adversary administrative process that didn’t afford Barclays the opportunity to defend itself.
“In essence, FERC asserts that this court must serve as a rubber stamp,” Thomas Nolan, an attorney for Barclays, said in a court filing.
A hearing on the matter is scheduled for today in federal court in Sacramento, California. Barclays is set to ask U.S. District Judge Troy Nunley to put the lawsuit on hold and first decide whether it should be dismissed before considering whether the fine should be enforced, reduced or increased.
FERC said Barclays is trying to delay paying the fine and that the bank had a chance to make its arguments at the administrative proceeding, during which it declined the opportunity for a hearing. Nunley may decide to hear testimony, view evidence or hold hearings about whether the fine is justified, agency lawyers said in court filings.
The proposal by the London-based bank would cause months of unnecessary delay and threaten FERC’s authority, expanded in the wake of Enron Corp.’s manipulation of energy markets, to protect consumers, the agency’s lawyers said.
“Barclays and its individual traders’ conduct in this case present some of the most egregious manipulative conduct in electricity markets since Enron,” Todd Brecher, a FERC attorney, said in a court filing. “The delay sought by respondents in this matter would frustrate the strong public interest in protecting consumers from manipulation.”
The case is Federal Energy Regulatory Commission v. Barclays Bank Plc, 13-01158, U.S. District Court, Eastern District of California (Sacramento).