"In its report to FERC, OE alleges that Barclays intentionally made certain day-ahead physical transactions at a loss at Mid-Columbia, Palo Verde, South Path 15 and North Path 15. OE argues that these losses were incurred in order to benefit Barclays’ IntercontinentalExchange (“ICE”) fixed-for-floating financial swap positions at the same locations. Thus, OE maintains that Barclays assumed a loss in the physical market in order to move the various indices for the financial swaps up or down to provide an overall gain for Barclays. OE estimates that Barclays gained $34.9 million in unjust profit and that the alleged market manipulation caused other market participants to lose an estimated $139.3 million."
For its part, Barclays has responded by claiming that its trades were above board. That said, this clearly isn't good news for the bank. I am a bigger advocate for the banking system we have than most these days, and am particularly weary of those politicians who play the populist in blaming banks for the woes of the world. That said, there is working the system and there is cheating it, and the Barclays of a few years back seemingly got very comfortable with at least walking the line, if not worse. Barclays may be too big to fail, but it is certainly not too big to be made an example of, and it is clear that FERC intends to do just that.