On April 10, 2018, FERC approved a Stipulation and Consent Agreement (“Settlement”) among the Office of Enforcement (“OE”), ETRACOM LLC (“ETRACOM”), and Michael Rosenberg (together, with ETRACOM, “Respondents”) as in the public interest. OE claimed that Respondents violated federal law and FERC’s rules against anti-manipulation in the California Independent System Operator Corp. (“CAISO”) wholesale electric market. FERC determined that the Settlement was fair and reasonable and resolved all outstanding claims and proceedings between OE and the Respondents.
On December 16, 2015, FERC issued an Order to Show Cause and Notice of Proposed Penalty against the Respondents, requiring them to show cause why they should not be found to have “engaged in market manipulation by interfering with or obstructing a ‘well-functioning market’” (see May 16, 2016 edition of the WER). Specifically, OE alleged that Respondents submitted virtual supply transactions in order to affect prices and benefit ETRACOM’s Congestion Revenue Rights. On July 17, 2016, FERC issued an Order Assessing Civil Penalties against Respondents, where FERC determined that certain ETRACOM trades violated section 222 of the Federal Power Act and the Commission’s Anti-Manipulation Rule. On August 17, 2016, FERC filed a federal lawsuit in the United States District Court for the Eastern District of California, requesting that the court affirm its July 17 order. OE and Respondents thereafter engaged in mediation, which produced the Settlement.
In the Settlement, Respondents stipulated to certain facts but did not admit or deny that they violated federal law or FERC’s rules against market manipulation. Respondents did, however, agree to pay $1.9 million in disgorgement, interest, and civil penalties, which would be paid in part to CAISO for distribution among market participants, with the remainder (and majority share) going to the United States Treasury. ETRACOM also agreed to implement a compliance plan and submit compliance reports to FERC for a period of two years. In approving the Settlement in its April 10, 2018 Order, FERC stated that it “is a fair and equitable resolution of the matters concerned and is in the public interest, as it reflects the nature and seriousness of the conduct.”
FERC’s order approving the Settlement can be found here.