WASHINGTON, Feb 26 (Reuters) - Details of Barclays' fight
with the U.S. energy regulator over alleged power market
manipulation will be made public now that officials have
rejected the investment bank's claim the probe is a publicity
stunt.
Barclays Plc had said the Federal Regulatory Energy
Commission was pursuing a case against the bank "to garner
additional publicity for its own enforcement activities while
seeking to portray Barclays negatively," according to an August
filing from the bank that has just been made public.
The regulator found that Barclays manipulated the California
power market from late 2006 to 2008 and should pay $470 million
in fines.
According to the FERC, the British bank and four of its
traders used losses in physical markets to make gains in
financial markets and they knew their activity was unlawful.
Barclays has challenged the regulator's finding in a series
of filings and sought "confidential" treatment of some elements
of its defense.
Two weeks ago, the FERC rejected Barclays bid for
confidentiality and about a dozen briefs were made public on the
regulator's website late on Monday.
The battle over the record fine is becoming a test of the
FERC's authority to protect consumers and investors from
wrongdoing in energy markets.
Among other things, the FERC investigation uncovered trader
banter that the British bank has termed "unfortunate." The four
traders boasted in emails and instant messages about how "fun"
it was to "crap on" physical power prices on the West Coast.
Bank defenders argue that more trades add healthy liquidity
to the market and are in the interests of consumers.
Congress in 2005 expanded the FERC's powers in the wake of
the Enron electricity manipulation scandals in the western
United States earlier in the decade.
If Barclays continues to fight and there is no settlement,
the dispute is expected to land in federal court.
Officials at Barclays declined to comment.
Barclays was last year fined about $450 million for rigging
a key benchmark lending rate.
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