Barclays energy fine could cause bank mega-headache

Barclays Canary Wharf

Barclays could face the threat of prosecution over Libor-rigging after US regulators confirmed they would be fining the bank $453m for allegedly manipulating electricity markets.

The Telegraph reports that Sandy Chen, banks analyst at broker Cenkos Securities, said the decision by the Federal Energy Regulatory Commission (FERC) to pursue Barclays over claims its traders attempted to rig electricity markets could derail a deferred prosecution agreement signed with the US Department of Justice a year ago over the lender’s involvement in Libor-rigging.

'The FERC fine - a civil penalty for alleged energy market manipulation - could trigger a US DOJ review of the Libor DPA (deferred prosecution agreement), in our view', wrote Mr Chen in a note to the broker’s clients.

Chen quoted the terms of the Barclays settlement over Libor with US prosecutors, which states that “as a result of Barclays’s admission of its misconduct, its extraordinary cooperation, its remediation efforts and certain mitigating and other factors, the department agreed not to prosecute Barclays for providing false LIBOR and EURIBOR contributions, provided that Barclays satisfies its ongoing obligations under the agreement for a period of two years'.

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Barclays electricity-rigging fine raises prospect of Libor prosecution, warns analyst

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