The US federal energy regulatory commission (Ferc) said it had filed a suit seeking an order to affirm its previous demand for civil penalties from the bank and four of its former traders.
The potential penalty was announced a year ago, but Barclays insists it has not broken any laws in the way it traded electricity prices in California over two years to December 2008.
Ferc's intended penalty, which comprises a $435m fine and a handover of $35m profits to low-income households, is even larger than the £290m that Barclays paid last year for rigging Libor.
Previous documents released by Ferc contain messages exchanged between four former Barclays employees – Daniel Brin, Scott Connelly, Karen Levine and Ryan Smith – in which they are said to have discussed "propping up" an electricity index.
Barclays' new CEO, Antony Jenkins, is determined to clean up the bank's image after rows over bonuses, the Libor scandal, and compensation to customers for miss-selling payment protection insurance.
A Barclays' spokesman said: "We strongly disagree with the allegations made by Ferc against Barclays and its former traders in the Ferc's petition, and we believe the penalty previously assessed by the Ferc is without basis.
"We intend to vigorously defend this matter in federal court, where the Ferc will have the burden of proving its allegations and we will be able to present a balanced and full presentation of the facts."
Ferc's petition to the court reiterated previous allegations that the regulator had made, Barclays added, insisting that it was not a balanced description of the activities that took place. "We believe that our trading was legitimate and in compliance with applicable law," the Barclays spokesman said.
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