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Powered by the attorneys of Bracewell & Giuliani, Energy Legal Blog® is your resource for updates and analysis on national and global energy issues.
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  1. CFTC v. Kraft Foods: What is Market Manipulation?

    Thursday, July 16, 2015 9:35 am by , and

    The Commodity Futures Trading Commission (CFTC) is engaged in its first court battle interpreting its new anti-manipulation authority under the Commodity Exchange Act (CEA) as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank):  CFTC v. Kraft Foods Group, Inc. and Mondelēz Global LLC.[1]  The case involves allegations that Kraft Foods manipulated the wheat futures and cash markets in 2011.  While the case is still in its infancy, and additional facts may come to light that clarify the CFTC’s position, the Complaint can be read to suggest that conduct intended to (or maybe even just anticipated to) influence market prices is per se manipulation if the actor benefits from the impact on prices.  As discussed below, this leaves participants in physical commodity markets with important questions to consider. (more…)


  2. Scope of Trial De Novo Debated in Barclays Electricity Manipulation Case

    Wednesday, June 24, 2015 4:34 pm by , and

    After almost eight years since the Federal Energy Regulatory Commission (FERC) commenced its investigation against Barclays Bank PLC (Barclays) and four of its traders, Scott Connelly, Daniel Brin, Karen Levine and Ryan Smith, for allegedly manipulating the California electricity markets, Barclays filed its answer in federal district court. As expected, Barclays denied all of FERC’s substantive allegations and asserted that the District Court should give no merit to FERC’s findings of fact or legal conclusions. FERC, according to Barclays and the individual traders, must prove its case before an independent arbiter and cannot rely on anything that happened at the agency level. FERC is seeking a $435 million civil penalty against Barclays; $15 million against Connelly; and $1 million each from Brin and Levine. (more…)


  3. Federal District Court Denies Barclays Motion to Dismiss FERC Petition Which Alleges Manipulation and Assesses Significant Penalties

    Thursday, May 21, 2015 2:02 pm by , , and

    For the past two years we have been tracking and reporting on an enforcement proceeding brought by the Federal Energy Regulatory Commission (“FERC”) against Barclays Bank PLC (“Barclays”), Daniel Brin, Scott Connelly, Karen Levine, and Ryan Smith (collectively, the “Traders” and together with Barclays, “Defendants”) for alleged manipulative trading in the western electricity markets from November 2006 to December 2008. Yesterday, the United States District Court for the Eastern District of California denied a motion by the Defendants to dismiss the manipulation action. Although the court’s order did not address the merits of the manipulation charge, the court’s order is significant because it is the first judicial ruling on the scope of FERC’s enforcement authority over the physical electricity markets and the court found that FERC can pursue civil penalty actions against individuals as well as companies. (more…)


  4. FERC Enforcement – What to Expect in 2015

    Tuesday, January 6, 2015 4:27 pm by and

    The Federal Energy Regulatory Commission’s (FERC’s) Office of Enforcement (Enforcement) recently released its annual report on enforcement activities for 2014.  As is typical, Enforcement identified its primary concerns as detecting and deterring fraud and manipulation in its markets and ensuring the safety and reliability of the grid.  Enforcement also released statistics on its 2014 settlements ($25 million in civil penalties, $4 million in disgorgement) but those statistics concern cases that began years earlier and shed little light on what market participants should expect in 2015.[1]  In order to predict what we are likely to see in 2015, and the potential risks that companies may face from Enforcement actions, it is helpful to examine the currently pending cases and to understand the most recent internal changes within Enforcement.  Also relevant to predicting what market participants can expect in 2015 are the following:  the reach of FERC’s manipulation authority is being challenged in the courts, the Department of Energy’s Inspector General (IG) is examining FERC’s enforcement process and FERC will have a new Chairman and head of Enforcement in 2015.  The current pending cases and these developments shed more light on what to expect in 2015 than the statistics FERC released concerning 2014.

    In 2014, market participants, for the first time, showed a willingness to challenge Enforcement actions instead of settling.  Five companies have refused to pay assessed civil penalties and settle thereby causing Enforcement to go to Federal court or to an administrative law judge to enforce the penalty and manipulation claims.[2]  These cases present the first court challenges to the reach of FERC’s anti-manipulation authority.  We should expect more challenges in 2015 because another company has publicly vowed to challenge FERC should FERC proceed with a charge of manipulation.[3]  However, unless and until the courts narrow Enforcement’s reach, we should expect that Enforcement will continue to be aggressive in its prosecutions. (more…)


  5. CFTC Seeks Input on Dodd-Frank Implementation Issues Affecting Energy End-Users

    Tuesday, April 1, 2014 10:33 am by

    With most of its rules implementing the swap regulatory provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) in place, the Commodity Futures Trading Commission (“CFTC”) is seeking new public input on several aspects of its Dodd-Frank rules that directly affect energy markets participants who use swaps to hedge risk or who transact physical agreements containing options that are subject to the swap regulations.  Entities that utilize swaps and options in this manner, but are not otherwise required to register with the CFTC as “swap dealers” or other regulated entities, are referred to as “end-users.”

    In the first such initiative, on April 3, 2014 the CFTC’s staff will host a public roundtable to discuss issues concerning end-users with respect to Dodd-Frank regulations that have raised questions and requests for clarification with the CFTC and its staff.  In particular, this roundtable will cover the scope of the CFTC’s definition of the term “swap,” which was defined in a lengthy interpretation issued in August 2012.  (more…)


  6. Could You Be A Commodity Trading Advisor or Commodity Pool Operator and Not Know It?

    Wednesday, February 19, 2014 4:32 pm by and

    As the Commodity Futures Trading Commission’s (“CFTC”) Division of Swap Dealer and Intermediary Oversight recently reminded market participants in a Staff Advisory, entities that meet the definition of a commodity trading advisor (“CTA”) are subject to various regulatory requirements and may be required to register as a CTA with the National Futures Association (“NFA”). The Staff Advisory is an indication that the CFTC is turning to compliance with its regulatory and registration requirements now that the rulemaking process of the Dodd-Frank Act is finishing. Given this transition, as well as the recently expanded scope of the CFTC’s regulatory oversight over CTAs and commodity pool operators (“CPOs”), entities that advise others or are pooled investment vehicles for futures, options, or swaps should consider whether they might be subject to the CFTC’s CTA and CPO regulatory requirements. (more…)


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