Barclays
traders are damned by their own emails which reveal how they bragged
about rigging energy prices to make profits
1
November 2012
Emails
and phone messages between foul-mouthed Barclays traders in New York
reveal how they bragged about rigging energy prices in America to
make huge profits.
Critics
yesterday said the expletive-ridden correspondence provides further
evidence of the ‘rotten culture of casino banking’ that built up
under disgraced former boss Bob Diamond.
The
bank faces a £270million fine by the US Federal Energy Regulatory
Commission for allegedly manipulating the energy market across
Western America between November 2006 and 2008.
Emails
and phone messages between foul-mouthed Barclays traders in New York
reveal how they bragged about rigging energy prices in America to
make huge profits
Four
traders are accused of conspiring to sell electricity at a loss to
drive prices down.
This
would enable simultaneous bets on falling energy prices to reap huge
profits, leading to losses of £86million for other investors and
pensions funds.
It
is alleged to have taken place at four electricity-trading hubs
across the western US – Mid Columbia in Washington State, Palo
Verde in Phoenix, Arizona, and South Path 15 and North Path 15 in
California.
These
hubs are where electricity is channelled, stored and then distributed
around the region.
Barclays
and other banks trade in complicated financial instruments which bet
on electricity price movements at these hubs.
The
accused Barclays traders – Daniel Brin, Scott Connelly, Karen
Levine and Ryan Smith – face penalties totalling £11million.
The
bank faces a £270million fine by the US Federal Energy Regulatory
Commission for allegedly manipulating the energy market across
Western America between November 2006 and 2008
Connelly
was described as ‘the leader of the manipulative scheme’ and the
highest paid. He faces a £9.3million fine.
The
bank was also ordered to pay back £22million in profits made from
the alleged energy manipulation scam.
But,
in arguably a more devastating blow to Barclays, the US regulator
published a series of emails and phone messages sent by the bank’s
traders.
In
a series of messages dated November 3, 2006, Ryan Smith bragged to a
colleague that he had managed to manipulate the energy markets.
He
said: ‘I totally f****** with the Palo market today,’ adding: ‘I
just started lifting the p*** out of the palo.’ Smith continued:
‘was fun. Need to do that more often.’
In
a separate exchange on December 7, 2006, he said: ‘I’m going to
c*** on the NP light and it should drive the SP light lower.’
Critics
said the crude messages reinforced the immoral, profit-crazed image
that Barclays has desperately tried to shed since new chief executive
Antony Jenkins took over in August.
Critics
say the expletive-ridden correspondence provides further evidence of
the 'rotten culture of casino banking' that built up under disgraced
former boss of Barclays, Bob Diamond, left
John
Mann, who sits on the Treasury select committee of MPs, said: ‘This
just shows how the rotten culture of casino banking that was built up
under Bob Diamond went all the way through Barclays. Traders were
clearly programmed to do anything to make a profit.’
The
emails sent by Barclays’ American traders have echoes of the brash
messages sent by their counterparts in London who boasted about
rigging key interest rates.
These
were published in June when Barclays was fined £290million by UK and
US regulators over the scandal. This led to the departure of Diamond
and several other top executives. Liberal Democrat peer Lord
Oakeshott said: ‘The American authorities’ allegations of
Enron-style rigging of electricity prices shows what a toxic trail
Bob Diamond left behind him.’
All
four traders accused of rigging the energy markets are thought to
have left the bank, although none are understood to have been fired.
Barclays
has been given 30 days to appeal and said it intends to do so. It
said it ‘strongly disagrees with the allegations’, adding: ‘We
believe that our trading was legitimate and above board and intend to
vigorously defend this matter.’
Barclays
is likely to argue that it did not have big enough positions in the
energy market to be able to manipulate prices.
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