Barclays Seeks Dismissal of FERC Suit Over $488 Million
The U.S. Federal Energy Regulatory Commission can’t sue the bank over sales of electric energy contracts because the transactions weren’t inherently misleading to buyers, lawyers for the bank said in a court filing today. They also said FERC waited too long to file its case and that the lawsuit, if allowed to proceed, should have been filed in New York.
“Actual trades with counterparties taking opposite positions do not constitute manipulation, even when those trades were intended to and may have contributed to a” change in prices, Thomas Nolan, an attorney for Barclays, said in a filing in federal court in Sacramento, California.
Barclays is responding to a lawsuit filed in October alleging it has failed to pay $488 million in fines and disgorgement assessed by FERC for allegedly gaming energy markets in the western U.S.
Craig Cano, a FERC spokesman in Washington, didn’t immediately respond to a voice-mail message seeking comment on the filing after regular business hours.
The agency is seeking court approval of its penalties. The regulator alleged the U.K.-based bank and its employees engaged in a “fraudulent scheme to manipulate electricity prices” from 2006 to 2008 and in July fined Barclays $435 million and ordered it to surrender $34.9 million. It also directed four former traders to pay $18 million, including a $15 million penalty for the alleged ringleader of what the FERC has described as a “coordinated, fraudulent scheme.”
Also named in the petition are ex-Barclays energy traders Daniel Brin, Scott Connelly, Karen Levine, and Ryan Smith. The bank and the traders have denied wrongdoing.
“There is a complete absence of allegations of manipulative conduct,” bank lawyers said in today’s filing.
Barclays also argues that because its trades didn’t result in the actual physical delivery of electric energy, FERC lacks authority to bring its lawsuit. The case should be dismissed or transferred to federal court in Manhattan, according to the filing.
The case is Federal Energy Regulatory Commission v. Barclays Bank Plc, 13-01158, U.S. District Court, Eastern District of California (Sacramento).
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