Barclays on Thursday vowed to fight a proposed $470 million fine from American regulators who accused the British bank of manipulating rates in California's energy markets.
The issue stems from late October, when the Federal Energy Regulatory Commission threatened to seek a $435 million penalty and disgorgement of an additional $35 million from Barclays over trades it made on energy prices. The potential penalty, part of a broader crackdown that includes recent cases against JPMorgan Chase and Deutsche Bank, would be the regulator's largest fine ever.
But in a regulatory filing on Thursday, Barclays indicated that it would seek a Federal District Court hearing if the commission moved forward with the sanction. Barclays, which plans to challenge the agency's analysis of the questionable trading, said that it would fight the case in court rather than accept the fine or seek an administrative hearing.
In its initial order against the bank, the commission sa id Barclays employees had made trades that were designed to skew the prices for electricity in what the industry calls the “physical†market. Through complex calculations and citing vulgar internal e-mails, the agency argued that the bank booked gains in financial bets that were greater than losses on the physical trades. The trades, according to the order, resulted in a loss of $4 million over the period while allowing the bank to record gains of $35 million on the financial contracts.
At the time of the filing, Barclays issued a statement challenging the commission's allegations, saying the bank's “trading was legitimate and aboveboard†and said it intended to “vigorously defend this matter.â€
The commission did not immediately comment.
