Barclays asks judge to stop regulator from collecting fines
Barclays denied claims that it manipulated the electricity prices in California and asked the court to prevent federal energy regulators from collecting a fine amounting to $488 million, Bloomberg reported. Lawyers of the bank said the US Federal Energy Regulatory Commission or FERC cannot sue Barclays on the sales involving its electric energy contracts since the deals themselves did not inherently mislead the buyers. The lawyers also claimed that it took a very long time for the FERC to lodge the case and that if the lawsuit was allowed to prosper, it should be filed in New York.
In the filing with the Sacramento, California federal court, Barclays Attorney Thomas Nolan said that actual trades that took place between parties who have opposite positions do not constitute manipulation even if those trades were meant to and may have led to change in the prices.
The filing was in response to an October lawsuit filed against Barclays for its alleged failure to pay fines and disgorgement amounting to $488 million as assessed by the FERC. The regulator wants to obtain the approval of the court for its penalties.
FERC claimed that the Barclays and its employees were part of a fraudulent scheme to manipulate electricity prices for two years from 2006 to 2008. The UK-based bank was fined $435 million and ordered to surrender $34.9 million by the regulator in July. Four former traders of the bank were also asked to pay $18 million, which includes a penalty of $15 million for the alleged ringleader, of what the regulator says was a coordinated, fraudulent scheme. Together with the bank, the traders have denied any wrongdoing.
In today's filing, Barclays' lawyers said, "There is a complete absence of allegations of manipulative conduct." They added that FERC did not have the authority to file the case since there was no actual physical delivery of electric energy and asked that it be dismissed or transferred to a Manhattan federal court, the report said.