Regulators Fine Barclays $453 Million Over U.S. Energy Price Rigging

American regulators are fining the British bank Barclays nearly half a billion dollars over the bank’s role in manipulating energy prices in the western United States from 2006 to 2008.

On top of the $453 million fine announced Tuesday, the Federal Energy Regulatory Commission (FERC) ordered Barclays to return about $35 million in “unjust profits” from the manipulation. Those funds would go to the programs that subsidize energy costs for low-income residents of Arizona, California, Oregon, and Washington.

The matter is bound for federal court. Barclays released a statement Tuesday vowing “to vigorously defend” trading activities it called “legitimate and in compliance with applicable law.”

But the detailed fine order from FERC includes snippets of incriminating e-mails and instant messenger conversations between the Barclays traders involved. One junior employee told a friend he was “trying to drive price” in a direction that would benefit Barclays financial products tied to the energy markets of the western U.S. Another Barclays trader “stated in an IM exchange that he ‘totally fukked [sic] with the Palo mrkt today,’” according to the FERC document. In one e-mail, a trader asked a colleague “to keep the price up” of a particular product in order to benefit the bank.

The price-rigging activity alleged by FERC in the Barclays case is a microcosm of a larger problem. Apparent manipulation of oil prices has sparked investigations on both sides of the Atlantic, and the European inquiry lead authorities to raid the offices of three large oil companies in May. Barclays’ activities hurt electricity consumers, but the broader fuel market cheating hurts nearly all consumers. Fuel prices drive the cost of almost everything people buy, especially food. And price rigging is not limited to energy and oil markets. Traders also appear to be manipulating the markets for foreign currency exchanges, precious metals like gold, complex financial products known as derivatives, and just about everything else.