(Adds Total and analyst comments; factbox in related content)
Sept 22 (Reuters) - U.S. federal energy regulators onTuesday alleged traders at the U.S. arm of French energy companyTotal SA manipulated the natural gas market in thesouthwestern United States between June 2009 and June 2012.
This is the latest case in which FERC has allegedmanipulation of the power or natural gas markets in a type ofloss leader strategy where traders lose money in one market - inthis case the physical market - to benefit positions in abenchmark or other financial index.
In recent years, FERC has alleged violations of similartypes of loss leader trading manipulation by JPMorgan Chase & Co, which paid $285 million in fines in 2013, and BarclaysPLC and BP PLC, which are still fighting theFERC allegations against them.
Total said it was convinced its U.S. traders did not commitany of the manipulation alleged by FERC. A spokeswoman at Totalsaid the company had fully cooperated with FERC.
The increase in market manipulation cases in the UnitedStates is a derivative of Congress giving regulators "powerfulpenalty authority to police against crime in their respectivemarkets," said Susan Court, principal at SJC Energy ConsultantsLLC and a former director of the FERC Office of Enforcement.
The staff alleged the scheme at Total involved making"largely uneconomic trades for physical natural gas duringbidweek designed to move indexed market prices in a way thatbenefited the company's related positions," according to thenotice.
In addition to Total, FERC also named traders andsupervisors on the Total Gas & Power North America West Desk,saying that Therese Nguyen and Aaron Hall devised and executedthe scheme. Hall declined to comment and Nguyen could notimmediately be reached.
Over the past decade, FERC and other U.S. and worldregulatory agencies have increased the policing of manipulationof the energy and financial markets, including an investigationof Libor (London Interbank Offered Rate).
FERC has issued almost $1.2 billion in fines since the U.S.Energy Policy Act of 2005 significantly increased the penaltiesit can impose, boosting them to $1 million per day per violationfrom a prior cap of $10,000 per day.
FERC did not include a potential penalty against Total inits notice of alleged violations, which was dated Sept. 21 butreleased on Sept. 22.
The staff at the FERC Office of Enforcement issues a noticeof alleged violations after it has largely finished itsinvestigation and the subject has had a chance to respond andhas not agreed to settle.
It is often the first step in the process where the subjectof an investigation is publicly identified. The usual next stepis for the enforcement staff to make a recommendation to thecommission to issue a show cause order, which would require thesubject being investigated to show why FERC should not issue apenalty.
FERC said the West Desk implemented the scheme on at least38 occasions during the period in interest. FERC also saidNguyen and Hall each implemented the scheme and directed othertraders in implementing the scheme.
(Reporting by Scott DiSavino; Editing by Andrew Hay and JessicaResnick-Ault and Marguerita Choy)
Barclays (BARC)
BP (BP.)
