Barclays Plc and four former traders were ordered to pay a combined $487.9 million in fines and penalties by the U.S. Federal Energy Regulatory Commission for engaging in what the agency said was a scheme to manipulate energy markets in the Western U.S. from 2006 to 2008.
The agency directed the company and traders to pay $453 million in civil penalties to the U.S. Treasury within 30 days, according to the order issued yesterday. The London-based bank also must surrender $34.9 million in profits, to be distributed to programs that help low-income homeowners pay energy bills in California, Arizona, Oregon and Washington, the FERC said.
“Manipulating energy markets comes at a steep cost,” said U.S. Senator Ron Wyden, an Oregon Democrat and chairman of the Energy Committee. “Consumers have the right to heat and power their homes without fear that traders are stacking the deck against them to rack up unjust profits.”
The electric-energy fine surpasses the 290 million pounds ($438 million) Barclays paid for manipulating the London interbank offered rate and is a setback to Chief Executive Officer Antony Jenkins’s attempts to rebuild regulators’ confidence in the bank. FERC’s move is part of a crackdown by global regulators on alleged rigging of benchmarks used in markets from crude oil to currencies.
The penalties, which the agency first proposed Oct. 31, stem from an investigation in the FERC’s crackdown on market manipulation. Since 2011, the agency publicized at least 13 probes of energy-market gaming, including investigations of trading units at Deutsche Bank AG and JPMorgan Chase & Co.
“This does show a new regulatory toughness,” John Coffee, a law professor who specializes in corporate governance at Columbia Law School in New York, said in an e-mail. The penalties imposed on individual traders exceed what the U.S. Securities and Exchange Commission does in similar regulatory cases, he said.
Barclays gained 0.4% to 309.5 pence at 2:51 p.m. in London, giving the company a market value of about 40 billion pounds. The shares have climbed 18% this year.