A recent district court order highlights the importance of maintaining a strong compliance program with effective compliance controls and practices, while highlighting the risk of employee misconduct for the enterprise itself. Specifically, on December 20, a California district court denied a motion to dismiss a FERC complaint that seeks to enforce a penalty against a company and one of its traders. In addition to finding that FERC’s claims were not time barred, the court also found that the employer can be held liable for the trader’s actions even though the trader withheld information from the company regarding the trading activity at issue. However, in a win for the company, the court limited the civil penalties that may be sought in a complaint to the proposed penalty set forth in FERC’s order to show cause. This limits FERC’s ability to penalize a defendant for choosing to contest a proposed sanction in district court.
FERC, CFTC, and State Energy Law Developments
Since January, FERC-regulated market participants and practitioners alike have anticipated how FERC may approach its enforcement mission under the stewardship of Chairman Richard Glick following his appointment as chair by President Biden. Although most market participants and practitioners have expected FERC to take an aggressive approach in investigating and penalizing instances of misconduct, FERC confirmed those expectations in its May 20 open meeting.
The Commodity Futures Trading Commission (CFTC) announced last week that it has obtained another admission from a trader of violations of the Commodity Exchange Act and CFTC regulations, demonstrating its continued aggressive enforcement of its market anti-manipulation provisions.
The Federal Energy Regulatory Commission (FERC) announced on February 22 that its Office of Enforcement would examine wholesale natural gas and electricity market activity during last week’s extreme cold weather “to determine if any market participants engaged in market manipulation or other violations.” FERC’s brief press release explained that its examination is part of its existing surveillance program for market participant behaviors in the wholesale natural gas and electric markets.
A natural gas trader pleaded guilty in federal district court last week to conspiring to commit commodities fraud and wire fraud in an insider trading scheme over natural gas futures. His co-conspirator had pleaded guilty last July to conspiracy to commit wire fraud and to violate various provisions of the Commodity Exchange Act and the Commodity Futures Trading Commission’s (CFTC) anti-manipulation rule.
The Commodity Futures Trading Commission (CFTC or the Commission) Division of Enforcement filed the most enforcement actions in the Commission’s history in fiscal year 2020 (FY 2020).
The Commodity Futures Trading Commission (CFTC) indicated on April 24 that it is conducting a review of the $40-per-barrel plunge in the WTI crude price that occurred on April 20. The CFTC stated that it is conducting the review to understand why the pricing happened, to ensure that the market functioned properly, and to rule out foul play.
Read our recent LawFlash discussing the Federal Energy Regulatory Commission’s (FERC) plan to assist regulated entities in managing enforcement- and compliance- related burdens during the ongoing coronavirus (COVID-19) pandemic, particularly FERC plan to exercise prosecutorial discretion regarding events arising during the pandemic.
The US Court of Appeals for the Fourth Circuit resolved a question of first impression on February 11 on when the statute of limitations period commences for civil enforcement claims brought by the Federal Energy Regulatory Commission (FERC) under the Federal Power Act (FPA or the Act) when the alleged violator opts for adjudication in federal district court instead of an administrative proceeding.
Currently at issue before the US Court of Appeals for the First Circuit is whether the filed rate doctrine prevents a court from assessing the reasonableness of a utility’s rates in the retail market.