U.S. Regulator Orders Barclays, Traders To Pay $487.9 Mln Energy Trading Fines

(RTTNews) - The Federal Energy Regulatory Commission or FERC on Tuesday ordered British lender Barclays plc (BCS, BARC.L) and four of its traders to pay $453 million in civil penalties for allegedly manipulating electric energy prices in California and other western markets between November 2006 and December 2008.

The U.S. regulator also ordered Barclays to pay $34.9 million, plus interest, in unjust profits to the Low-Income Home Energy Assistance Programs of Arizona, California, Oregon, and Washington. The regulator ordered the four traders - Daniel Brin, Scott Connelly, Karen Levine and Ryan Smith - to pay a total of $19 million in fines.

While Connelly has been ordered to pay $15 million, while Brin, Levine and Smith will pay $1 million each.

According to the FERC, Barclays and the traders built and then flattened substantial monthly physical index positions at four of the then-most liquid trading points in the western U.S. for the fraudulent purpose of manipulating the index price to benefit Barclays' financial swap positions.

The FERC said that the actions demonstrated an "affirmative, coordinated and intentional effort to carry out a manipulative scheme, in violation of the Federal Power Act and FERC's Anti-Manipulation Rule". The regulator had initially proposed the charges against Barclays in October 2012.

Barclays and the traders have opted for a procedure under the Federal Power Act in which FERC may assess a penalty without a hearing before an administrative law judge. If Barclays and the traders do not pay the penalties assessed by FERC, then the regulator may seek affirmation of the penalties from a federal district court.

The FERC said that the penalties must be paid to the U.S. Treasury within 30 days. Barclays has been also given 30 days to distribute the unjust profits, with 19 percent going to Arizona, 63 percent to California and 9 percent each to Oregon and Washington.

BCS closed Tuesday's trading at $18.64, down $0.08 or 0.43 percent on a volume of 1.29 million shares.