Barclays Fined Record Amount For Channelling Enron, Manipulating California's Electricity Market

Tyler Durden's picture

It just is not Barclays' year. After being exposed (so far the only one) as a ringleader in a massive LIBOR-rigging scandal which cost Bob Diamond his job, yesterday the British bank added insult to injury, after the Federal Energy Regulatory Commission (FERC) fined it $470 million - the largest penalty ever levied by the energy regulator, and even larger than the bank's LIBOR fine - for getting caught doing what Enron got caught doing about a decade ago: manipulating California's electricity markets. Although while the former ended up being the biggest corporate bankruptcy at the time, led to the end of one of the nation's largest auditors and sparked a scandal so great it was all corporate America spoke for about for the next year, this time the news has come and gone, and nobody cares. Perhaps this is to be expected: in a time when none other than the central bank intervenes each and every day in every single market to preserve the "wealth effect", habituation to epic corporate manipulation of every imaginable kind is perfectly normal.

From Reuters:

The bank has 30 days to show why it should not be penalized for an alleged scheme of manipulating physical electricity prices at a loss in order to make profits in related positions in the swaps market, a strategy known as a "loss-leader".


British bank Barclays said it would fight the agency, likely setting up a landmark legal battle that could set a precedent over whether the once-common trading ploy in commodity markets is illegal or simply ill-advised.


It will have huge implications across the market, as the FERC -- which won expanded powers to tackle manipulation in 2005 after the California power trading scandal and related Enron meltdown -- pursues similar investigations against companies including BP and Deutsche Bank.


The FERC also said four of the company's power traders -- Daniel Brin, Scott Connelly, Karen Levine, and Ryan Smith -- have 30 days to show why they should not be assessed a total of $18 million in civil penalties.


It said their activity accounted for nearly a quarter of all trading in the next-day power market during the period, accruing gains of an estimated $34.9 million. Bank documents showed how the traders bragged about how they would "crap on" certain markets to profit in other ones, the order shows.

Barclays seems to think that to "crap on" is a good thing:

Barclays "strongly disagreed" with the order, which it said was "by nature a one-sided document, and does not reflect a balanced and full description of the facts."


"We believe that our trading was legitimate and in compliance with applicable law," Barclays spokesman Mark Lane said in an email. "We have cooperated fully with the FERC investigation, which relates to trading activity that occurred several years ago. We intend to vigorously defend this matter."


The four traders left Barclays over the past five years for reasons unrelated to the investigation, according to a source familiar with the matter. The bank closed its Portland office in 2011 and effectively quit the Western power market this year.

As we noted above, Barclays was the one that got caught doing this. The reality is that there are countless other banks who also engaged in comparable behavior, but were luckier (perhaps they did not donate to the political campaign of a given congressman and/or senator), and have been spared for now.

Mike Masters, co-founder of Better Markets and a frequent advocate for stronger rules, said it could be the "tip of the iceberg" as regulators probe more deeply into commodities.


"It's a very significant fine and not just because of the dollar amount. It also highlights how banks and swap dealers were combining financial and physical positions in a predatory way to manipulate commodity markets," he said.


"If it's happened in power markets you can be sure it was also going on in crude oil and other markets like refined oil products," Masters said.

Of course it is. The problem is what happens when one uncovers that the entity doing the commodity market manipulation is none other than America's central bank?

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Zer0head's picture

fined it $470 million

(that would be in dog dollars for the bankster class)

vast-dom's picture

"The problem is what happens when one uncovers that the entity doing the commodity market manipulation is none other than America's central bank?" Not much to uncover when it is ALL done in plain sight by Bernanke et. al. To make individuals "feel" wealthier so they spend more...

pods's picture

Remember when banks used to just take in deposits, pay out interest on those deposits, and loan out money for muppets to buy capital goods that they could not afford to do through savings?

Neither do I.


Bicycle Repairman's picture

LOL.  Wait a minute!  Are these regulators saying that speculators are rigging an energy market?  A market that was already rigged before by other manipulators?  LOL.  Come on man, everyone that speculators are necessary to balance the "animal spirits" in the free marketplace.  LOL.  No speculators, no marketplace.  <snicker> This is some kind of communist conspiracy.  Next thing you know they'll be saying oil, gold and every other commodity under the sun is being manipulated by forces that do not serve "duty and humanity".  LOL.  You'd have to be a conspiracy nut to believe that nonsense.  Or a communist.  Or a closet homo.

A Nanny Moose's picture

Actually its customers, and the customers of its customers, got fined $470 million. Where does this $470 million go?

redpill's picture

They are using it for a 0% loan to Barclay's to recapitalize their balance sheet after stress caused by large settlement payments, of course.


aint no fortunate son's picture

hopefully they take down jamie next, JPM's being investigated too, tick tick tick

WarPony's picture

He does! the cremation happened so fast, they couldn't check dental.

Bicycle Repairman's picture

Lay's teeth are in the urn.  Let's have a Geraldo Rivera special on it.

LawsofPhysics's picture

What garbarge.  Here, let me make it clear for everyone. No energy no eCONomy.

If I am an energy provider, my attititude would be; "Fuck you, pay me."

Just be thankful they still accept fiat.

Who runs bartertown, bitchez?

Junk away morons, it is what it is and you need energy in order to actually do anything.

Ruffcut's picture

The market doesn't need energy. It has run on bullshit for a long time now.

Bicycle Repairman's picture

I thank G-d every day that I have juice so I can play my electric twanger.

LongSoupLine's picture



line them up and globally televise them being gutted by members of the angry middle class.  Then lets see how many crimes are committed after that.



LawsofPhysics's picture

I agree, time to cut out the bullshit paper-pushing middle men.

Mr Lennon Hendrix's picture

We would save a lot of money.

For example, JPM runs the foodstamp program.  I am sure this monopoly allows them to charge too much.  So instead of people like Ron Paul saying we should cut the program why doesn't Paul focus on cutting out the middle-men?

Because politicians are professional liars.

Hang them all and hang them high.

MachoMan's picture

Are we actually certain that privitization (used loosely, as all of these financial institutions are arms of the state at this juncture given their dependence on the teet) of this function costs taxpayers more?

Mr Lennon Hendrix's picture

JPM's job is to make money....

....for themselves.

iDealMeat's picture

SNAP is administered by both JPM and BofA..

11b40's picture

Yep.  Gifts from the politicians they sponsor.

MachoMan's picture

True, but are we certain that JPM costs more money to administer the program than the government would?  Each seem equally capable of turning everything they touch to shit...  While we may decide to change the administrator simply out of spite, I'm not sure it's the best move per bean counting.  I'm not advocating one way or the other...

toomanyfakeconservatives's picture

Let's give them the only thing that separates us from the "barbarians", a very public jury trial. No bs rules of evidence or appointed judges, just the facts ma'am. I'm flexible on punishment if a jury of former WalMart greeters and underemployed Americans sees the evidence and finds them guilty.

laughing_swordfish's picture

Total Agreement.

Indict ALL of them on charges of "Economic Crimes against The State" or "Social Parasitism". No judges - just a Revolutionary Tribunal composed of three cadres selected at random and a jury of workers directly affected by the misdeeds of the guilty.

Have it all on TV - and the only punishments will be a choice (by the jury) of public hanging, public beheading, or public shooting in a stadium full of the proletariat.

And while you're at it, extend the punishments to the extended families of the guilty - let's see their Harvard-undergrad brats get scaffolded or shot first.


Cognitive Dissonance's picture

Chump change whatever the amount. Just the cost of doing "bidness".

Lost Wages's picture

Look at the bright side. At least they were cordial and didn't inundate communities with rolling blackouts.

Biggvs's picture

Do I have this right... First we hear Barclays manipulates LIBOR, making mortgage interest rates artifically lower. Now they manipulate power prices lower. Shouldn't these guys be Obama's super-duper double-secret best friend?

Boilermaker's picture

They had to surrender a fraction of what they stole!

That'll learn 'em not to do it again!!!

GrinandBearit's picture


Fuck all these banksters to hell !


Mr Lennon Hendrix's picture

Jail would be an unnecessary expense. 

Just hang 'em and reuse the rope.

LMAOLORI's picture



Barclay's Executives quick roll out a new fee so we can pass this onto consumers as soon as possible

BLOTTO's picture

Enron was headed by the head of NM Rothschild..


Royal Houses of Europe and its blood lineage.


On January 25, 2002, John Baxter, a former Enron vice-chairman "committed suicide" before he could testify at a Senate subcommittee. "There was a self-inflicted gun shot wound to the head," said the local police chief. "There was no sign of foul play."


Anytime i see 'committed suicide' it can mean = 'snuffed out'

WarPony's picture

Barclays has apparently not been paying it's zionista dues

tawse57's picture

BARC shares up 5% in London. Obviously the 470 million fine is considered nothing much.

Theosebes Goodfellow's picture

It does beg the question, "How much of this fine will go to rate payers?"

Answer: None.

So whose racket is it really?

Downtoolong's picture

Don't worry about the money Barclays. It's like Doritos, we'll make more.



Conax's picture

Bob Diamond, Jamie Dimon what's with these names?  Some reference to a high cost rock help you get a banking job?

I'm changing my name to Dick Dimund tomorrow. Really.

BLOTTO's picture

Americans and the masses aren't as stupid as they are uninformed, brainwashed and heavyily conditioned of what is really happening in their country and the world because of the dumbed down content and propaganda they consume in the illuminati controlled mainstream media (MSM) and the public educational system.

Dont under estimate the power of the conditiong by the global elite on us commoners...Most of you ZedHeds should consider yourself very lucky to see past this 'reality' they have created for us and be 'in tune.'


Recent studies have declared that high school graduates are unable to write a coherent sentence; schools teach information and expect students to retain and regurgitate data, not connect them. This is by design; the elite do not want too many critical thinkers in a diminished economy.


Remember that politicians are the fronts for (or part of) the Elites and as such share in their fortunes and power.


Also, remember on election day - that who ever you vote for - you just helped carry on the agenda...because it doesnt matter - they own and control both sides.


The creek is polluted way further up the stream...stopping mid-stream aint going to do shit.

Radical Marijuana's picture

... the masses aren't as stupid as they are uninformed, brainwashed and heavily conditioned ...

YES! I believe it is important to understand that there was a prolonged process of backing up lies with violence. Consider the long-term consequences of the fundamental facts regarding the nature of militarism, which has been the basis of the development of the Neolithic civilization which surrounds us totally, and is practically taken for granted as the woodwork. THE NATURE OF MILITARISM IS THE MOST IMPORTANT POINT ABOUT OUR SOCIETY!   To repeat the obvious basics, that were clearly present in the first book about the Art of War, and which were merely amplified, for thousands of years, SUCCESS IN WAR DEPENDS ON DECEITS, AND SPIES ARE THE MOST IMPORTANT SOLDIERS.

THOSE FACTS ARE WHAT IS NECESSARY TO UNDERSTAND BANKING, AND THE RELATIONSHIP OF BANKS TO THE PEOPLE. That relationship is the result of literally thousands of years of developing systems based upon FRAUDS BACKED BY FORCE.

That relationship has been on an exponential growth curve, because there was an inherent positive feedback situation: the more profit was made from fraud, the more that profit could be reinvested in more fraud!

The masses of people were trapped inside of that overall situation. Those who were the best at being dishonest, and backing that up with coercion, have been controlling civilization, more and more. Therefore, the entire system of punishments and rewards, sticks and carrots, were there for the controllers to use, more and more. The masses of people were rewarded for agreeing with lies. They were punished for talking about the truth. Those who agreed to go along with the huge lies got the carrots. Those who are not willing to go along with the huge lies got the sticks.

From a more abstract level, a reward is actually two punishment units multiplied together, because the source of all of that was the ability to back up lies with violence. Those endlessly multiplying dilemmas drove the social situations which appeared to make the masses of people look stupider and stupider. However, they are not really that stupid. In a bizarre way, they have adapted to living for a long time, over many generations, in a slave society, where being stupid paid better than being intelligent. Since the entire civilization was controlled by the biggest bullies' bullshit social stories, and those who agreed to go along with that bullshit were rewarded, while those who did not agree were punished, there was an inherent engine operating to make people appear to become stupider and stupider. However, that was more of a cultural conditioning, rather than any kind of genetic or innate inability.

One exception that I would mention is that, during an individual's life time, constant bad nutrition, and pollution, etc., can impair the ability of the brain to develop, and therefore, that can result in a kind of real, and permanent stupidity in the individuals who were treated that way. Those who internalize the lies too much, inside of the profit from junk food, and profit from disease, and other similar systems, actually do become brain damaged, and therefore could be actually called stupid. Unfortunately, there is a LOT of that kind of almost irreversible developmentally driven "stupidity in America today. However, in the bigger picture, those processes too were the result of the prolonged triumph of lies, backed by violence.

Anyway, my overall point is that I agreed with the comment by BLOTTO.  The masses of people are not so much innately stupid, as that they have been forced to adapt to the social realities around them by becoming stupid. The runaway power of the biggest banks to engage in endless frauds, making more and more money out of nothing, and then using that to buy up more control over the political processes, and the mass media, etc., has been picking up speed in America since 1913, so that, at present, it is almost impossible to imagine how it was possible for President Andrew Jackson to "kill the bank!"  Of course, the fact that Jackson was able to do that was only because he was able to miraculously survive the assassination attempts by the biggest bankers, as well as, back then, there were more independent newspapers, and more Americans that could still understand what was wrong with the banksters' systems.

Since Jackson's days, the international banksters were systematically able to subvert everything, bit by bit, such as paying for the corruption of the political processes in order to stop silver from being money. Then able to sneak the Federal Reserve Board legislation through, which then gave them the runaway edge to buy up control of all the biggest newspapers, which then gave them a runaway set of advantages to corrupt the political processes even more. Through one false flag attack started war, after another, and through every other means of organized crime, discrediting or destroying those politicians that could not be bribed or intimidated, the banksters were finally able to achieve a totally fiat money system, that the banksters controlled. From the 1970s onwards, that privatized fiat money-as-debt system was no longer limited by any connection to gold. Therefore, that system as a whole was able to launch into a nearly perfect match to an exponential growth curve of total debts throughout the USA. From that point on, the total indebtedness of Americans kept on doubling, and doubling, and doubling ... BUT, that system of established debt slavery has now become debt insanity, because it is getting impossible to imagine how the total debts can keep on doubling!

However, during the times when the entire economic system was based on the triumphant banksters' frauds, backed by force, the masses of people were forced to adapt to living inside of that! Inside of a money-as-debt system, the best strategy for individuals was to go into debt. That is, their best individual solutions were to agree to go along with the huge lies, and get the carrots for doing so. To not do that meant being punished, if not directly, then still indirectly, by being left behind in the dust, as the runaway money-as-debt system drove endless inflation. Basically, the apparent "stupidity" of the masses of Americans are due to them actually adapting to live inside of a system based on the runaway triumph of organized crime, taking control of their entire civilization! Those that agreed to go along with that system were rewarded by that system, while those who refused where rejected by that system, which encompassed their entire surrounding society!

The financial situation of the American family is like that of a family which has suffered a home invasion. A gang of criminals have moved into their home, then, by backing up their demands with violence, more and more, decade after decade, they have forced the American family to adapt to living in that situation, of runaway debt slavery. The dilemma faced by every slave, which is do what they are told, or be killed, has been working its way through every aspect of American society.  The overwhelming vast majority of Americans are debt slaves. They have, bit by bit, adapted to survive inside that context by appearing to become stupider and stupider. However, it is not fair to say that such a slave is actually stupid. They may well be doing the best that they could, and may well be seen to behaving in a practically realistic and intelligent way, by agreeing with bullshit. The vast majority of Americans have gradually been driven into the predicament where they were forced to agree with frauds.

Therefore, the biggest banks, which were international, were more and more able to take control of the political processes, and the mass media that presented those processes to the public. Thereby, the banks could gain control of those public bodies that were supposed to regulate those banks. Thus, the regulatory agencies became perfect examples of what I have been discussing above. The regulators were selected and paid to be incompetent. Any regulator that was not incompetent would end up being attacked and fired, or rather, as it all got worse and worse, would never have a chance to be hired in the first place. The regulatory agencies were driven to appear stupider and stupider. Meanwhile, the same processes were also happening through the law court systems. Thus, the basic, intelligible and intelligent principles of the law, such as the ideas of punitive damages, which had been developing in a clear and consistent way for several centuries, became subverted, and more and more were applied in ways that looked stupider and stupider, because the law was more and more enforced in ways that deliberately ignored its own basic principles, although it still paid lip-service to those principles. Thus, the majority of the public administrative regulators, and their back-up system of law court judges, became more and more obviously professional liars and immaculate hypocrites, which did their jobs in ways that made them look stupider and stupider. However, if they were not like that, then they would never have been promoted to do those jobs in the first place, or would have been fired, as soon as they actually attempted to do their jobs in intelligent ways, rather than continued to do their jobs in more and more incompetent ways.

Therefore, this entire runaway system, inherent in militarism, and then developed throughout the monetary system, is more and more demonstrating these patterns. Therefore, stories like this one are now the new normal! Blatant rigging and gaming of the system gets only a slap on the wrist, which is a tiny percentage of the profits that were made from doing that. There is NO DETERRENCE, because those committing the crimes effectively control the regulators and the courts, by controlling the puppet politicians who appoint those persons.

On a deeper level, these problems are inherent in the nature of life itself. We are looking at the reality of how human ecology develops a political economy. The biggest bullies have been able to set up the entire system of civilization, on the basis of fraud, backed by force. All of those who are subjected to that system have been conditioned to be slaves, that accept being inside of that system, in order to get along.

THE PROBLEM IS WHERE TO WE GO FROM HERE??? This kind of "new normal" social situation depends on continued exponential growth of the already astronomically sized magnitude of its frauds, backed by force. We have already crossed the threshold where the SIZE of its numbers have passed from the domain of debt slavery into debt insanity. We have already reached the point where doubling total debts even one more time looks extremely difficult, while doubling and doubling those again and again, like during the 20 Century, appears to be absolutely impossible.

It is now becoming more and more plainly obvious to more and more people that the biggest banks are getting away with frauds, without there being any effective operation of the rule of law to arrest them. The constitutional framework, that was supposed to protect the masses of people from their government, and enable those people to control their government, has been trashed. Therefore, foreign banks can easily operate in America, rigging the established systems for their benefit, and then, IF caught, get away with doing that, facing only token fines, which are merely another cost of them doing business, rather than actually being any effective deterrent to prevent them from doing similar things again and again, in the foreseeable future!

MY ANSWER TO WHERE WE GO FROM HERE IS THAT THERE MUST BE PARADIGM SHIFTS IN OUR POLITICS. There has to be more radical truth emerge, to systematically understand the runaway triumphant biggest bullies' bullshit, which are now the almost totally triumphant social stories, that justify the enslavement of the American people, and indeed, the vast majority of all people on this planet. That paradigm shift has to move beyond the ways that all the professional liars and immaculate hypocrites are able to discuss political problems, by using the same old impossible ideals, based on false fundamental dichotomies, which are always backwards, and therefore, always backfire.

As these kinds of problems automatically run away, and get worse, faster, it remains to be seen just how "stupid" the vast majority of Americans will continue to be ... Will they finally be pushed past the point of no return, where they realize that they are debt slaves, whose systems have become such runaway debt insanities, that they no longer can adapt to that by going along with it anymore?

These are interesting questions ... to which, of course, I do not know the answers. At the present time, I tend to be almost 100% pessimistic about the prospects here. I tend to believe that the vast majority of Americans have been conditioned too well, for too long, to be able to recover from that, and start thinking through these problems in ways that are sufficiently intelligent to break through the paradigms that bind them now ... However, since I believe we have already broken through the threshold of debt slavery into debt insanity, I believe that Americans are going to be forced to go through the psychotic breakdowns of the established systems surrounding them. I tend to believe that the masses of Americans are going to be forced to go through paradigm shifts in the basic political ideas. Therefore, there WILL arise this crucial question, which is more important than ever before, about just how "stupid" are the masses of Americans???

In my opinion that question is actually about how brainwashed and conditioned are the American debt slaves, and is their apparent "stupidity" only a function of them adapting to live inside of the debt slavery systems, while that was possible, and of benefit to those who could do that best, but NOT actually an expression of their innate stupidity, in the sense that it would be impossible for them to understand that those circumstances had radically changed, and therefore, they were going to also be forced to radically change too?

The endless stream of stories, like these particular ones about Barclays, and the other Big Banks, rigging everything from the interest rates, to the price of energy, etc., and getting away with doing that, or them operating within a situation where even IF they get caught, they still effectively get away with that, are all signs and symptoms of the entire established system of debt slavery breaking through into the realm of debt insanity. As that happens, all of the debt slaves, which are the vast masses of Americans, and even more so most of the other people on this planet, ARE actually simultaneously being driven through to debt insanity, and therefore, being driven through the psychotic breakdown of their whole world view. Everything that used to work, for those debt slaves that adapted to live inside that system, by taking the carrots, and avoiding the sticks, or being rewarded for agreeing with lies, while being punished for mentioning more truth, is BREAKING DOWN!  The "new normal" is watching the tipping point tilt from acceptable debt slavery, to unacceptable, and actually impossible, levels of debt insanity. Therefore, the whole world system is actually going INSANE, and therefore, the question of just how "stupid" the masses of people are is perhaps the most important political question of these times!

Therefore, I HOPE that BLOTTO was right, that the masses aren't as stupid as they are uninformed, brainwashed and heavily conditioned ...

virgilcaine's picture

Barclays is a basket case. What are they a Brit bank?

azengrcat's picture

Banking License = License to Lie, Cheat, Steal, Bribe, Launder, RICO, Price Fix, Manipulate, Counterfeit etc. until the next fraud bubble is invented.

insanelysane's picture

Can't wait for the press release on how the term "crap on" is actually a customer friendly term.

Strider52's picture

Barclays: "See, the word 'CRAPON' is actually an acronym for Consumer Rate Allowance Protection Over Nominal, see?"

Marley's picture

They should direct the fine toward the public schools since Enron ripped California off for 15 big ones and placed The TerminalDick in as govenor to hosit a bond to pay the bill.

Mercury's picture

Enron's bankruptcy was really the result of an accounting scandal unrelated to their gaming of California's absurd electricity rate system.

But the real question is: why is California manipulating California's electricity market?

Why should it be that California electricity consumers never have to pay an actual market rate for electricity?

Back in 2009 Marla looked behind the curtain of the Enron rate manipulation scandal and found rainbows and unicorns:  

In the meantime, as long as The Regulatori persist in their misguided belief that a system characterized by marked susceptibility to gaming, requiring intricate complexities mandated by interest group politics (this last is likely considered a feature rather than a bug by designers) and resulting in the concentration of control in the hands of would-be central planners, somehow delivers efficiency gains when set against a market pricing system, plenty of examples of false vacuums will continue to exist and be created. 

ILikeBoats's picture

So in addition to "risk on or risk off" I now have to also track "crap on" and "crap off" timing also?

firstdivision's picture

Too bad it wasn't only Barclay's that we behind this, and not only CA market that was being manipulated.  Perhaps FERC may find something interesting if they look into GS and MS in the PJM market.