JPMorgan accused of energy-market manipulation by U.S. agency

FERC says it has identified eight manipulative bidding strategies

Other Cases

Deutsche Bank agreed on Jan. 22 to pay $1.6 million to resolve FERC claims that an energy-trading unit manipulated markets in 2010. The Frankfurt-based bank didn’t admit or deny wrongdoing.

In the Barclays case, the FERC levied $453 million in civil penalties against London-based banks and four its ex-traders. It also directed the lender to give up $34.9 million in profits. The bank has vowed to fight the penalties.

The FERC accused one former Barclays employee, Scott Connelly, of heading a market-gaming scheme, fining him $15 million. It fined three other former traders $1 million each.

“FERC appears to be willing to fine individual traders in some of these larger enforcement cases,” said Carrie Allen, an energy attorney with Akin Gump Strauss Hauer & Feld LLP. “It’s a pretty standard prosecutorial tactic that FERC is embracing.”

The agency fined ex-Amaranth Advisors LLC trader Brian Hunter $30 million in 2011, ruling he manipulated the price of contracts on the New York Mercantile Exchange in 2006 while boosting the value of financial derivatives. A U.S. Court of Appeals ruled in March that FERC lacked the jurisdiction for the fine.

Public Citizen

“I do not see a positive role in the way that these banks are operating in these markets,” Tyson Slocum, director of the energy program at Public Citizen, a Washington-based consumer- advocacy group, said in a phone interview. “I don’t understand the value added to reliability, to efficiency.”

The FERC should use its authority under the Federal Power Act to ensure that utility customers are refunded for market violations, he said.

The FERC in March 2012 reached a then-record $245 million settlement with Constellation Energy Group Inc. over alleged energy trading violations in New York. Constellation didn’t admit any wrongdoing.

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