Confronted with the possibility of having to pay the largest penalty ever imposed by the Federal Energy Regulatory Commission for market manipultaion, Barclays Bank PLC Friday attempted to lay out its case that it had neither the intent nor the ability to manipulate prices in the wholesale electric power markets.
The proposed fine against the Wall Street bank is $470 million for allegedly manipulating the power markets in California between 2006 and 2008. “The Commission repeatedly has found that Barclays had no market power,” the bank said, adding that FERC should conclude that the show-cause order should not be issued and that the case be terminated [IN08-8].
Responding to FERC allegations that it manipulated the power markets, Barclays said that “if the Commission continues to pursue this matter as [the Office of Enforcement] recommends, the Commission will be unable to prove the alleged violations…in federal district court, which is the forum that Barclays and the individual traders have selected.”
Barclays contends that FERC enforcement’s allegations raise “many red flags” that should serve as a warning to the Commission not to proceed with a court case. “The record reveals that [enforcement] has not presented evidence which shows that Barclays: 1) made material misrepresentations or omissions; 2) used a fraudulent device, scheme, or artifice to benefit Barclays’ financial positions at the four electricity delivery points at issue in this case; 3) engaged in fraudulent conduct that would create false or artificial day-ahead power prices on ICE [IntercontinentalExchange]; or engaged in conduct that caused the ICE day-ahead index, on any date during the alleged manipulation months, to be false or not reflect supply and demand.
“The federal district court that hears this case will not ignore these warning signs,” Barclays said.
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