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US FERC threatens Barclays with US$470m fine

Barclays revealed probe on Wednesday but said it would contest the charges

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The US Federal Energy Regulatory Commission (FERC) has threatened Barclays with fines of up to US$470 million to settle accusations of energy market manipulation while the bank has denied the charges.

The investigation relates to communications by four traders on Barclays' West Coast power desk. FERC has alleged that the four personnel in question exchanged messages explaining how they would use certain trades in one market to profit in another.

All four traders previously worked for US power firm Mirant, which was fined for energy market manipulation ten years ago. FERC has alleged that from 2006 to 2008, the traders influenced power prices to make monetary gains with their financial swap positions, triggering losses of US$139 million for rivals in the process. As consequence of their actions, it is alleged that Barclays netted US$34.9 million.

Barclays revealed the investigation on Wednesday but said it would contest the charges “robustly”. It now has 30 days to do so. The probe was initiated in 2007 but was only revealed by the bank on Wednesday.

A spokesperson said, "We believe that our trading was legitimate and in compliance with applicable law. We have co-operated fully with the FERC investigation, which relates to trading activity that occurred several years ago. We intend to vigorously defend this matter."

Meanwhile, FERC told CFOWorld overnight that it would not comment at the moment on an on-going investigation. On Wednesday, it was revealed that Barclays was the subject of an anti-corruption probe instigated by the US Department of Justice.

In June, Barclays was fined £290 million for attempting to manipulate Libor rates. It also faces a UK Serious Fraud Office investigation into payments received from Qatari investors in 2008.


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