News Release: November 17, 2016
Docket No. AD07-13-010
Item No. A-3
Report | White Papers: Trading Compliance Practices , Anti-Market Manipulation Enforcement Efforts
FERC Office of Enforcement Issues 10th Annual Report on Enforcement The Federal Energy Regulatory Commission’s Office of Enforcement continued to focus on fraud and market manipulation, serious violations of mandatory Reliability Standards, anticompetitive conduct and conduct that threatens the transparency of regulated markets in fiscal 2016. The 2016 Report on Enforcement, released today, marks the 10th such report. As in previous years, this year’s report provides the public with more information regarding the nature of non-public Enforcement activities, such as self-reported violations and investigations that are closed without public enforcement action. It also highlights the office’s work auditing jurisdictional companies, monitoring market trends and market competitiveness and performing surveillance and analysis of conduct in wholesale natural gas and electric markets. Concurrent with the release of this year’s Annual Report, Enforcement also is releasing two white papers providing insights regarding staff’s views and emerging trends related to manipulation of FERC-jurisdictional markets. The first summarizes recent Commission and federal court case law regarding development of the Commission’s anti-manipulation doctrine and identifies factors staff considers when deciding whether to pursue or close allegations of manipulation. The second provides guidance to entities regarding compliance practices that can be effective in detecting and preventing market manipulation if properly implemented within their organizations. Some highlights of today's Enforcement Report for 2016:
- Investigations staff opened 17 new investigations while closing 11 pending investigations either with no action or through a Commission-approved settlement. Staff negotiated settlements for almost $12.25 million in civil penalties and disgorgement of nearly $5.7 million in unjust profits. These settlements also included provisions requiring the subjects to enhance their compliance programs and periodically report back to Enforcement regarding the results of those compliance enhancements. Since 2007, the total payable, non-pending civil penalties assessed by the Commission amounts to approximately $641 million, and the total disgorgements amount to slightly over $401 million.
- Audits and accounting staff reviewed the conduct of regulated entities through 14 audits of oil pipeline, public utility and natural gas companies, resulting in 214 recommendations for corrective action and directing refunds and recoveries totaling $5.3 million.
- Analytics and surveillance staff worked on more than 40 investigations and reviewed numerous instances of potential misconduct, with some reviews resulting in referrals to Investigations.
Highlights of the white paper on manipulationinclude:
- Discussion of some of the specific types of conduct that FERC has found to constitute market manipulation, as well as some factors the Commission and courts have found to be indicative of fraudulent conduct.
- Discussion of some of the mitigating and aggravating factors the Commission has considered in assessing an organization’s culpability, and some examples of market manipulation investigations that staff closed without action.
Highlights of the white paper on effective compliance practices include:
- Discussion of specific practices that an organization might use to prevent and detect market manipulation, including implementing limitations on a trader’s ability and incentives to manipulate or engage in other misconduct.
- Discussion of effective practices and tools for monitoring trading activities, enforcing compliance obligations, and ensuring that the compliance program remains up-to-date and effective on an ongoing basis.
Today's report and white papers can be found at:
- https://www.ferc.gov/legal/staff-reports/2016/11-17-16-enforcement.pdf
- White Paper on Effective Energy Trading Compliance Practices, available at https://www.ferc.gov/legal/staff-reports/2016/tradecompliancewhitepaper.pdf
- White Paper on Anti-Market Manipulation Enforcement Efforts Ten Years After EPAct, available at https://www.ferc.gov/legal/staff-reports/2016/marketmanipulationwhitepaper.pdf
R-17-10
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