In the News

FERC approves settlement in PJM market manipulation cover-up case ~ SNL Financial (8-22-2017)

Quote: “The suspect trading behavior in PJM is similar to that at the center of several other FERC enforcement proceedings, including one high-profile case that is being adjudicated in court in which the agency fined Houlian ‘Alan’ Chen and the Powhatan Energy Fund almost $30 million.”

Trader Agrees to Pay $11.7M in Win for FERC Enforcement ~ RTO Insider (8-22-2017)

Quote: “Although the penalties were reduced from the $16.3 million the commission had sought, the case represents a victory for FERC in its crackdown on traders who profited from what the commission called risk-free up-to-congestion (UTC) trades intended to cash in on line-loss rebates in PJM — the same type of trading that gave rise to the commission’s high-profile battle with brothers Kevin and Rich Gates and their Powhatan Energy Fund.”

Supreme Court Ruling on SEC Disgorgement Seen as Applicable to FERC ~ The Foster Report (6-9-2017)

Quote: “The Supreme Court decision is good news for Powhatan, said Kevin Gates, vice president of a managing member of the company. ‘It further highlights FERC’s incompetence’ regarding the timing of when the Commission brought the case to court, in that ‘they couldn’t even act in a timely fashion’ with a five-year statute of limitations, Gates told The Foster Report.”

‘Basic Fairness’ And The Future Of FERC Enforcement Proceedings ~ Forbes (5-4-2017)

Quote: “The court rejected FERC’s argument, finding it ‘defies notions of fairness and common sense.'”

Judge in $487.9M Barclays case agrees ‘de novo’ review is not what FERC thinks ~ SNL Financial (3-31-2017)

Quote: “‘Every court has now rejected FERC’s cramped and unreasonable reading of the de novo review language in the FPA. Yet parties have been forced to spend millions of dollars vindicating their basic due process rights. That money would have been far better spent on building new infrastructure and improving energy markets. It’s time for FERC to formally abandon its ill-advised position,’ Scherman said in an email.”

Happy St. Patty’s Day, See Page 9 ~ The Friday Burrito (3-17-2017)

Quote: “I haven’t reported for awhile on the Powhatan case regarding their defense against FERC Enforcement’s harassment, a matter I have written about on several occasions. Yet this week Kevin Gates, an officer of Powhatan Energy Fund LLC’s managing member, sent out a note to the followers of his blog and I opted with Kevin’s consent to run it here as a letter to the Burrito.”

How Can FERC Function Without a Quorum? ~ Power Magazine (1-31-2017)

Quote: “But a small trading group in eastern Pennsylvania, Powhatan Energy Fund, refused to buckle under to Bay’s enforcement police. They are engaged in long-standing litigation over the matter.”

Bay Resigns after Trump Taps LaFleur as Acting FERC Chair ~ RTO Insider (1-26-2017)

Quote: “The criticism became louder when the principals of Powhatan Energy Fund, which had been under investigation by Bay’s unit for three years without being charged, released documents they say prove they had been unfairly hounded.”

Duke Energy Gets Slap On Wrist For Deceiving Federal Energy Regulators ~ Forbes (1-19-2017)

Quote: “So what should we make of the Justice Department’s $600,000 penalty for Duke? For starters, it raises provocative questions about the FERC’s efforts to deter market manipulation and protect competition in power markets. Do the same rules apply for participants in “organized markets” like PJM and participants in ‘traditional markets’ like Florida?”

In Powhatan Fund Amicus Brief, Professors Protest FERC’s View of “De Novo” Judicial Review in Market Manipulation Case ~ Foster Report (12-13-2016)

Quote: “The [ten administrative law] professors, who disclaim any position on the merits of the case against Powhatan, voice ‘grave concern’ over the implications of FERC’s legal position limiting the scope of “de novo” judicial review under the Federal Power Act (FPA) – specifically, FERC’s belief that a full-blown adjudicatory process in court may not be warranted on top of the administrative record FERC typically compiles en route to a final penalty determination.”

Pavlov’s Energy Markets ~ StopPath WV (12-6-2016)

Quote: “Years of environmental propaganda has conditioned you to behave just like Pavlov’s dogs when you hear the words ‘clean energy.’ You may believe anything with a ‘green’ label must be ‘good’ and therefore more valuable, without examining any actual benefits to you.

Energy markets will only work if they are consistent. Allowing one group of participants to escape the punishment heaped upon another group isn’t consistent. What kind of bell are they trying to ring?

Oh, and big wind is ripping you off… big time!”

Market monitor asks FERC to quickly order PJM to fix flawed capacity market rule ~ SNL Financial (11-23-2016)

Quote: “In those cases, including a high profile one involving the Powhatan Energy Fund, FERC accused the targeted entities of engaging in certain transactions for the sole purpose of collecting rebates PJM was giving to market participants that use its transmission lines when it collects excess line-loss payments.

Powhatan and some of the other defendants have vigorously fought FERC’s assertion that market manipulation can occur even when the market rules are being followed. They insisted that flaws in the market are not their problem; the only thing that matters is that they are complying with the commission-approved rules.”

West Chester’s Gates Brothers Win $60,000 for Legal Fees in Tussle Against Feds ~ Vista Today (11-17-2016)

Quote: “West Chester hedge fund owners Rich and Kevin Gates have won another battle, but not yet the war, against the Federal Energy Regulatory Commission over investigative bullying.”

Barclays Backs Gates Twins in FERC Trading Dispute ~ Power Magazine (11-10-2016)

Quote: “A dozen prominent federal administrative law experts have criticized the Federal Energy Regulatory Commission’s procedures…over whether FERC overstepped its authority in the case of the small Pennsylvania-based energy trader Powhatan Energy Fund. FERC contends that Powhatan trades in 2010 manipulated the PJM wholesale market. The issue is before a federal court.”

Law Profs Say Barclays’ $453M FERC Fine Needs Hearing ~ Law 360 (11-9-2016)

Quote: “Twelve administrative law professors from American University’s Washington College of Law, Lewis & Clark Law School, The George Washington University Law School and other schools said in an amicus brief Monday that they have ‘grave concerns’ about the legal and policy implications of FERC’s view of what constitutes a district court’s ‘de novo review’ of an agency’s civil penalty assessment. The amici urged the court to require a trial-type hearing for Barclays and traders…”

Judge Orders FERC to Pay Gates Brothers’ Attorney’s Fees in FOIA Dispute ~ RTO Insider (10-10-2016)

Quote: “Kevin and Rich Gates, acting as principals of the energy trading company STS Energy Partners, filed FOIA requests seeking documents related to investigations by FERC’s Office of Enforcement into two other energy trading companies, Oceanside Energy and Black Oak Energy.

The Gates brothers, who have been involved in a very public battle with FERC over market manipulation allegations against one of their other companies, Powhatan Energy Fund, said in filings that they wanted the documents ‘to shine light on FERC’s recent and punitive efforts against small power market traders for engaging in legal and ubiquitous activity.’ They have accused FERC of withholding information before.”

Only in California, See Page 3 ~ The Friday Burrito (10-7-2016)

Quote: “If you are a student of wholesale power markets in the U.S., then no doubt the outstanding litigation between FERC (Office of Enforcement, or OE) and several trading entities regarding allegations of market manipulation has caught your attention for one reason or another. These cases drag on forever, much to the delight of the law firms representing the plaintiffs and much to the consternation of these law firms’ clients. One such case , which I have written about multiple times, is the Powhatan Energy Fund.”

FERC Ordered to Pay Legal Fees in FOIA Dispute ~ StopPath WV (10-7-2016)

Quote: “It was FERC’s game playing trying to avoid release that caught them in the end.

Lawyers that go all broody over documents rarely win. And now it’s going to cost FERC $60,168.19.”

Citing media interest, Court orders FERC to pay FOIA legal fees of Powhatan brothers ~ SNL Financial (10-6-2016)

Quote: “Responding to the ruling, Rich Gates said, ‘FERC’s unjust withholding of FOIA documents is disgusting. We are appreciative of Judge Bates who said we have done a public service seeking them.'”

Court Tells FERC to Pay Up Over FOIA Dispute ~ Politico (10-6-2016)

Quote: “The D.C. District Court told FERC Tuesday that it needed to pay more than $60,000 in attorney’s fees over a FOIA dispute involving STS Energy, whose partners include Kevin and Rich Gates, twins who run a firm targeted by regulators for market manipulation.”

Son of former EPA chief adds to calls for less court deference to agencies ~ SNL (8-2-2016)

Quote: “‘There’s an elephant in the room with us today,’ wrote Gorsuch. Chevron allows ‘executive bureaucracies to swallow huge amounts of core judicial and legislative power and concentrate federal power in a way that seems more than a little difficult to square with the Constitution of the framers’ design,’ the judge said. ‘Maybe the time has come to face the behemoth.'”

Republican Platform: Free The EPA ~ Forbes (8-2-2016)

Quote: “Independent regulatory agencies are not subject to those same requirements or oversight. They face fewer constraints on their authority and as a result, they conduct less careful analysis of regulatory impacts and issue regulations without a good understanding of how they will affect the public. A 2015 government report finds that the ‘absence of information [on the benefits and costs of their rules] is a continued obstacle to transparency, and might also have adverse effects on public policy.’

In place of analysis, independent commissions (which can be anything but ‘collegial’) will often resort to the sort of highly polarized partisanship that we see in Congress, but without the virtues of gridlock. Whoever controls the majority of a quorum (which is only two or three members), rules. Literally.”

Reining in Prosecutorial Misconduct ~ WSJ (7-5-2016)

Quote: “For the minority of cases that involve intentional misconduct, prosecutors should be held accountable by judges and bar associations.”

House energy leaders suggest Federal Power Act inadequate, seek FERC’s input ~ SNL (6-10-2016)

Quote: “However, Upton and Whitfield asserted that organized wholesale markets continue to underachieve due to ‘pervasive and persistent problems within their respective regulatory frameworks.’ And despite the best efforts by FERC and the market operators to address these issues, they said the restructured wholesale markets have ‘become mere administrative constructs that are continuously ‘tweaked’ through the regulatory process,’ without much success.”

New England demand response enforcement deal raises FERC enforcement critic’s ire ~ SNL (6-2-2016)

Quote: “‘The public should really wonder why FERC’s Office of Enforcement, if it truly believes it can prove the allegations it brings, continues to erect every conceivable roadblock it can to avoid any real trial on the merits of its allegations,’ said Scherman, who stressed that he was speaking entirely on his own behalf and not on that of Lincoln or any remaining employee. ‘This pattern of conduct is as repugnant to the Constitution as it is harmful to the markets FERC oversees.'”

Tech Earnings and Bank Meetings ~ BloombergView (4-27-2016)

Quote: “FERC’s standards for market manipulation are rather famously nonexistent, and its case against Barclays is pretty puzzling. FERC has no theory of market manipulation; it just goes after stuff that kind of looks unfair.”

Barclays Fights Record Price-Fixing Fine in Power-Market Test ~ Bloomberg (4-26-2016)

Quote: “‘We won’t settle with the FERC as we did absolutely nothing wrong,’ Kevin Gates, co-manager of Powhatan with his twin brother Rich, said in an April 25 e-mail. ‘We have a civic and moral obligation not to succumb to their bullying tactics.'”

Deregulation 2.0: Europe And Japan Call For More Competition, Less Regulation In Utility Industry ~ Forbes (4-9-2016)

Quote: “What is so remarkable about these efforts in Europe and Japan is how much they have in common, especially with respect to the virtues of competition over regulation. Promoting competition in the utility industry will enable prosumers, catalyze innovation, drive customer adoption of distributed energy resources, enhance security and reduce and eventually eliminate rate regulation.

At least that appears to be the idea of big-picture policy changes taking place in Europe and Japan. By contrast, the demonization of utility deregulation is still deeply entrenched in the U.S. government.

In particular, the Federal Energy Regulatory Commission (FERC) appears to be more interested in pursuing politically popular witch hunts against non-incumbents for making Enron-like trades.”

FERC’s Cheryl LaFleur: It takes an energy village ~ Bloomberg Government (2-22-2016)

Quote: “Q: What’s your biggest accomplishment at FERC so far?

A: I think leading through the 17 months when I was acting chairman and chairman was probably my biggest accomplishment. It was a period of considerable turmoil and uncertainty; for most of the first half I didn’t know if I would be renominated, how long I might be chairman, or what might happen next. But I think I was successful at staying relentlessly focused on moving the work of the commission forward, leading as I would if it wasn’t time-limited.

Senator Mary Landrieu was the chairman of the Senate Energy Committee, our committee of jurisdiction. Both she and the current chairman, Senator Lisa Murkowski, who was then ranking member, were both very supportive of my nomination.”

Powhatan Energy Fund, in an Appeal from Heavy Civil Penalties, Puts FERC’s View of Adjudication Process on Trial ~ The Foster Report (1-15-2016)

Quote: “According to Powhatan, FERC posits that the district court judge has “unfettered discretion” to shortcut normal trial procedures and waive the Federal Rules by deciding to limit the “de novo review” to a “summary review” of the record compiled by FERC (a record, Powhatan underscores, that was not developed through formal, trial type procedures).”

Monopoly Much? America’s Largest Utility Hikes Rates Most In 9 Years Despite NatGas Price Crash ~ ZeroHedge (1-2-2016)

Quote: “Happy New Year Californians – behold the power of monopoly and regulatory capture.”

Regulators are Just People ~ The Friday Burrito (12-18-2016)

Quote: “Therefore, as the story-teller (rather than the oracle), here is my list of the top ten events for the last year, ranked in reverse order of relative importance: 3: FERC v. Powhatan Energy Fund—something of a food fight in that Powhatan has taken extensive measures to explain to the world and not just FERC’s Office of Enforcement (OE) that the rules under which the fund participated in PJM’s ‘up to congestion’ transmission rights market were FERC-approved and therefore perfectly legal. Odd then that OE comes along after the fact and attempts to assess civil penalties and disgorgements topping $30 million.”

Overzealous Federal Energy Regulators Threaten To Harm Market Efficiency ~ Forbes (11-25-2015)

Quote: “Basic principles of justice lie at the core of this debate. Unlike other agencies with anti-manipulation authority, FERC has sought to curtail effective judicial review. Despite clear statutory language granting courts jurisdiction “to review de novo the law and the facts involved, and … enter a judgment,” FERC has argued that the judiciary’s role should be to defer to FERC—in effect, to allow it to be judge, jury and executioner.”

Chester County Leadership – Rich & Kevin Gates ~ Vista Today (10-15-2015)

Quote: “Q: Why did Powhatan Energy Fund respond the way it did to the FERC?

A: We wanted to protect our reputations and FERC left us with no better option. Our response at www.ferclitigation.com may also have the secondary benefits of enabling our country to make more effective energy policy and regulations, shedding light on crony capitalism, exposing the way large financial interests influence politics, and holding our government accountable for its actions.”

Late Changes to House Energy Bill Leave Democrats Miffed; Passage Less Likely ~ RTO Insider (10-05-2015)

Quote: “FERC would be required to create an Office of Compliance Assistance and Public Participation to “promote improved compliance with commission rules and orders.” (Section 4211)

The proposal is an apparent response to complaints by some in the Washington energy bar that FERC’s Office of Enforcement, formerly headed by Chairman Norman Bay, is unfair and heavy handed.”

Critic assails DOE inspector general finding that FERC investigations followed procedures ~ SNL FInancial (10-02-2015)

Quote: “However, one of FERC’s biggest critics in that regard assailed the inspector general for focusing on whether FERC complies with its own policies without discussing whether those policies are flawed or violate due process in the first place.

‘That takes damning with faint praise to new heights,’ William Scherman, a former FERC general counsel and partner with the firm Gibson Dunn, said in an interview. The lawyer also said the inspector general appears to be inviting Congress to address the problem, ‘and hopefully they will’ in the energy bills moving thru the Legislature.”

How The Federal Government May End Up Paying Its Own Fine ~ StopPATH WV (9-29-2015)

Quote: “But, wait, which twin is good, and which twin is bad? They sort of look the same to me. Like maybe identical? Both twins demonstrated that they were much smarter than the regulators who are supposed to be monitoring both markets. Maybe it depends on where in the federal government you’re standing when you blow your whistle. By offering a reward for whistleblowing, the SEC demonstrates that it could actually be helped by those who expose things the agency wasn’t smart enough to catch. On the other hand, FERC punishes those who expose things they weren’t smart enough to catch. I don’t think FERC offers any rewards for exposing utility scams. In fact, it punishes those who expose incumbent utilities, dumb market design, and lazy regulation.”

Rich Gates Will Apply for Whistleblower Reward from SEC for ‘Flash Boys’ Revelations ~ Vista Today (9-23-2015)

Quote: “’There’s an amazing parallel between these two unique market problems,’ Gates notes. ‘In the stock market, high-frequency traders were given special benefits that enabled them to make money. And in the wholesale power markets, I believe incumbent utilities receive preferential treatment. Neither market has been too kind to outsiders like me. The only difference is that the SEC has been trying to remove the imbalances in its markets whereas FERC seems to favor and promote markets where these biases exist.’”

Trader facing large FERC penalties could see big payoff as whistleblower in bank case ~ SNL Financial (9-23-2015)

Quote: “Gates also believes that just like Credit Suisse and other dark pools were granting preferred status to high-frequency traders, FERC is granting preferred status to incumbent utilities. In both markets, he says he feels like he is treated like an outsider.”

Whistleblower on Credit Suisse dark pool says he’ll ask SEC for millions ~ Marketwatch (9-22-2015)

Quote: “The irony Gates sees is that FERC is suing over what the SEC may reward him for — when a security is simultaneously bought and sold.

‘There’s a funny parallel there,’ Gates says. ‘HFT was invited to come in and slaughter the sheep. I think the same thing is happening in the FERC world, where utilities are the preferred players, and outsiders like me, you try to squish them.’”

Don’t Mess With FERC’s Incumbent Utility Pets! ~ StopPATH WV (8-1-2015)

Quote: “Is FERC confused about who it serves? Is this case supposed to hinge on a jury’s failure to understand it and instead be swept away by platitudes and grandstanding from FERC’s sextet of lawyers? FERC used the word ‘Enron’ something more than 30 times in its District Court Petition. Maybe the defense can use the word ‘McCarthyism’ an equal number of times just to keep things fair?”

Gates Brothers Continue to Defy FERC ~ Vista Today (7-31-2015)

Quote: “’Powhatan did not pay the penalty to the FERC,’ said Richard Gates after the 60 days were up. ‘So, the Commission is now free to try to enforce its silly allegations in federal court. No matter what FERC elects to do, we will continue to chronicle its ineptitude on our website.’”

THERE’LL BE FERC TO PAY, Near the bottom ~ Politico (7-28-2015)

Quote: “’Powhatan is not going to make payment to the FERC. If they take us to court, we anticipate continuing to build the memorial at www.ferclitigation.com with additional media stories and legal filings to further expose their incompetence and bullying tactics. When the saga ends and the site is complete, we expect FERC will be a better agency because of us.’ [Gates said.]”

FERC Orders $15 Million Penalty in PJM Market Manipulation Case ~ RTO Insider (7-13-2015)

Quote: “FERC also may face challenges collecting from Tsingas and his company, which said in April that FERC’s investigation forced Tsingas to lay off all of his employees and “destroyed” the company.”

FERC Enforcement at the Crossroads: An Emboldened Program Surges Forward as Congress Expresses Skepticism ~ Fried Frank (6-30-2015)

Quote: “While Inspector General Friedman has yet to release the results of his investigation [requested by three U.S. senators on FERC’s enforcement practices], some members of Congress have shown an unwillingness to wait for additional feedback, and have instead worked to craft draft legislation that seeks to address the animating concerns found in the aforementioned Congressional correspondence.”

Gates Brothers To FERC: We’ll See You In Court ~ Vista Today (6-30-2015)

Quote: “A university expert labels it a far-reaching precedent that could force traders everywhere to guess what the moral intentions are for each government rule. Caught in the middle are the Malvern natives and owners of the West Chester-based Powhatan Energy Fund, Richard and Kevin Gates.”

Chesco brothers face battle with federal energy regulators ~ Philadelphia Inquirer (6-29-2015)

Quote: “‘Any time [regulators] level the term market manipulator, you’re automatically presumed as a bad person. But we have kind of been able to turn the tables a little bit by going public, by exposing them as being abusive regulators,’ Richard Gates…said in an interview this month.”

Does Former FERC Commissioner Wellinghoff Know How to Rap? ~ StopPATH WV (6-10-2015)

Quote: “Wellinghoff just doesn’t look like the prison type to me. I hope he knows how to rap. Survival, man!

But don’t worry. Nothing like that ever happens to the important people. And I’m sure Mr. Wellinghoff won’t be fined… oh… say… $30 million or anything.

It simply can’t happen again because Mr. Wellinghoff has lost his secret cache of FERC videos in a computer crash.”

Energy IG takes issue with video played at conference ~ Associated Press (6-10-2015)

Quote: “The inspector general for the Energy Department has concluded that a former chairman of the Federal Energy Regulatory Commission disclosed confidential material from a major investigation during a public conference last March.

That disclosure potentially threatens the integrity of the agency’s regulatory and enforcement work, he said.”

Ex-FERC Chair Wellinghoff Under Fire for Showing Deposition Video ~ RTO Insider (6-10-2015)

Quote: “The Inspector General ‘confirmed the essence of the allegation, finding that Mr. Wellinghoff had, in fact, disclosed nonpublic OE information in a public setting. We concluded that the disclosure of such information could threaten the integrity of FERC’s regulatory and enforcement process.’ Under FERC regulations, Friedman said, ‘virtually all of the information gathered during the course of an investigation is nonpublic.'”

May 2015 Brings a Crop of FERC ‘Loophole’ Manipulation Civil Penalty Assessments ~ Greenberg Traurig (6-9-2015)

Quote: “Ostensibly, based on these recent orders, market participants also must discern the purpose and intent behind the market design – an intent and purpose that may vary depending on whether you are FERC, the market monitor, market operator or a market participant – and avoid undercutting that purpose and intent, which may not be clearly articulated in the marketplace.”

Gates Brothers Eye Federal Court After FERC Orders $34.5M Fine ~ Vista Today (6-9-2015)

Quote: “FERC must wait 60 days for the Gateses to pay, leaving less than a week of the alleged manipulative energy market trades unexpired by that five-year deadline.”

City Power differentiates own deals from Chen’s ~ Utility Markets Today (6-9-2015)

Quote: “City Power alleged OE staff’s reply was full of vitriol based on a distortion of the facts – such as using the term “yacht” to describe Tsingas’ 32-foot outboard boat without a cabin or a shower, it added.

The FERC response called Tsingas’ three-bedroom house a “mansion,” City Power said, in what it called an attempt to humiliate Tsignas and bias FERC. Such tactics have no place in official filings of a federal law enforcement agency, it added.”

FERC Enforcement Process Under Fire in House Hearing ~ RTO Insider (6-5-2015)

Quote: “These comments [by Larry Parkinson] incensed Rep. Morgan Griffith (R-Va.), who flung his hands in the air and stood up in exasperation. When it was his turn for questioning the witnesses, he blasted Parkinson’s remarks.”

Review of Allegations of Improper Disclosure of Confidential, Nonpublic Federal Energy Regulatory Commission Information ~ U.S. Department of Energy, Inspector General (6-4-2015)

Quote: “We confirmed the essence of the allegation, finding that Mr. Wellinghoff had, in fact, disclosed nonpublic OE information in a public setting. We concluded that the disclosure of such information could threaten the integrity of FERC’s regulatory and enforcement processes. “

As its enforcement authority is clarified, FERC denies setting a trap for the unwary ~ SNL Financial (6-3-2015)

Quote: “By engaging in riskless wash trades that were designed solely to receive out-of-market transmission loss credits, FERC said Chen and the funds knew the commission and PJM would consider their strategy inappropriate or manipulative. FERC further maintained that they understood that other market participants would receive a proportionally smaller share of TLCs because of their trading scheme, and that fraudulent trades could not and did not provide any ‘benefit to the market.’

That reasoning has led to some consternation in the industry.”

Tariff Compliance Is Not Enough ~ Cadwalader, Wickersham & Taft LLP (6-3-2015)

Quote: “This ‘intent of the market design’ concept poses a significant challenge for market participants and highlights the continued importance of robust compliance programs that consider all aspects of a trading strategy, including perceptions of intended market design.”

House panel looks to overhaul FERC enforcement, tweak PURPA ~ SNL Financial (6-2-2015)

Quote: “A House of Representatives Energy and Commerce subcommittee on June 3 and 4 will review draft legislation aimed at revamping FERC’s enforcement program to ensure the agency is acting in a fair, consistent and transparent manner.”

FERC Orders Gates, Powhatan to Pay $34.5 Million; Next Stop, Federal Court? ~ RTO Insider (6-1-2015)

Quote: “In October 2011, FERC said a charging decision was ‘imminent,’ according to William M. McSwain, attorney for the Gates brothers.

The commission took no further action, however, until almost two years later, in August 2013, when FERC staff delivered a 28-page ‘preliminary findings’ letter summarizing why they thought Chen’s trades were improper. Attorneys for Chen and Gates rejected the arguments and reiterated their demand that FERC end the investigation.”

FERC Finds Manipulation Violations by Company and Trader that Complied with Tariff but did not Act to Further Market Design Goals ~ The National Law Review (5-30-2015)

Quote: “FERC’s view that traders must understand the design and purpose behind a market presents traders with significant additional concerns. Traders must now consider not only if a trade is profitable based on undefined ‘economic considerations,’ but they must also examine whether their trades affect the market as the market designers anticipated. This presents major issues for compliance and trading staff of companies trading in FERC approved markets.”

FERC fines Powhatan, energy trader in controversial market manipulation case ~ SNL Financial (5-29-2015)

Quote: “With Chairman Norman Bay not participating in the order, FERC has directed the Powhatan Energy Fund LLC, an energy trader and two funds created by that trader to pay relatively hefty penalties considering the relatively small trading operations involved for manipulating the PJM Interconnection LLC’s markets between June 1, 2010, and Aug. 3, 2010.”

Clowns Enliven Annual PJM Circus ~ StopPATH WV (5-26-2015)

Quote: “I’ve been trying to keep my nose to the ol’ grindstone and ignore the calliope music coming from PJM’s “Annual Meeting” in Atlantic City. But it’s really hard to ignore it when a clown scampers across your computer screen before you’ve even had your morning coffee.”

Former enforcement chief takes top job at Ferc ~ Risk.net (4-30-2015)

Quote: “Bay’s appointment is controversial…”

Brattle: Even with new enforcement powers, FERC still a step behind savvy traders ~ SNL Financial (4-28-2015)

Quote: “…[FERC] will need to walk a fine line between too little enforcement and overly aggressive regulation that can undermine markets and cause as much damage in the long run as manipulation itself…”

Hedge fund case tests Ferc’s anti-manipulation drive ~ Risk.net (4-20-2015)

Quote: “Throughout Powhatan’s filings and in the Gates brothers’ numerous media interviews, they have highlighted efforts by Ferc’s Office of Enforcement to convince Powhatan to settle. In one episode, Powhatan says that after carrying out a deposition of Kevin Gates, Ferc attorney Steven Tabackman pulled aside a lawyer for Gates and told him: ‘Kevin’s a businessman, isn’t he? He knows that it’s cheaper to settle than to fight this investigation.’

Ferc declined to comment and has not directly responded to the claim. Tabackman did not respond to an emailed request for comment.”

Powhatan Energy: Government Aggression Growing Despite Brothers Pushback ~ Vista Today (4-14-2015)

Quote: “‘In legal papers filed with (the Federal Energy Regulatory Commission), they said communicating with (now-chairman) Norman Bay ‘has been akin to beating one’s head against the wall,’’ the [Wall Street Journal] reported.”

UTC Trader: Firm was Ruined by ‘Unfair’ FERC Prosecution ~ RTO Insider (4-14-2015)

Quote: “‘The stress of an investigation that has lasted almost five years, along with the enormous expenses incurred as a result, have ruined the company even before any tribunal — judicial or administrative — has had the opportunity to determine the merits of staff’s accusations,’ [Tsingas’ lawyers wrote.]”

Power trader: FERC enforcement staff facilitated ‘rigged testimony’ ~ SNL Financial (4-10-2015)

Quote: “Like the Powhatan Energy Fund is doing in a FERC case targeting similar trading activity, another energy trader is claiming that neither he nor his firm tried to manipulate the PJM Interconnection LLC’s markets by taking advantage of a rebate that the RTO offers when it collects excess line-loss payments. Moreover, the trader, K. Stephen Tsingas, accused FERC staff of helping to facilitate “rigged testimony” and other improper behavior.”

Regulators Tap Prosecutors for Key Jobs ~ WSJ (4-6-2015)

Quote: “‘I can definitely say that there is a strong prosecutorial bent,’ Kevin Gates, one of the brothers, said in an interview. ‘They don’t seem to care about the facts or really anything beyond getting a settlement.'”

Morning Energy ~ POLITICO (3-30-2015)

Quote: “Senate Minority Leader Harry Reid’s announcement Friday that he won’t run for re-election in 2016 is sending out political and policy ripples…He also took such a special interest in energy policy…As the leader of a Democratic Senate supermajority early in President Barack Obama’s first term, [Senator] Reid steered an unprecedented tens of billions of dollars in clean energy investments through the federal stimulus program, helping spur solar, wind and geothermal projects in his state.”

Stress and Performance ~ BloombergView (3-12-2015)

Quote: “These plaintiffs [who are suing JP Morgan] should really be suing the people [at FERC] who made the rules, for malpractice.”

Powhatan’s zingers in FERC case ~ OverLawyered (2-20-2015)

Quote: “A filing earlier this month by Powhatan in FERC proceedings (represented by Drinker Biddle) has some subheads taking a not-exactly-respectful tone seldom met with in high-stakes administrative proceedings…”

PJM’s Energy Markets are Special! ~ StopPATH WV (2-19-2015)

Quote: “The insiders got together to talk about the outsiders last weekend. I’m sure my invitation got lost in the mail, along with yours, dear reader. Or maybe… gasp… we’re outsiders?”

Powhatan Fires Back at PJM ~ RTO Insider (2-16-2015)

Quote: “Hedge fund twins Kevin and Richard Gates, already embroiled in a battle with the Federal Energy Regulatory Commission’s Office of Enforcement, have now taken on PJM.”

FERC enforcement is different because energy markets’ purpose is different, regulators told ~ SNL Financial (2-16-2015)

Quote: “Moot also said that if FERC finds that some rule is ripe for manipulation, it needs to change that rule, and if for some reason it cannot do so, ‘you better tell people they should stop’ engaging in trading behavior that appears to be manipulating a rule. As for whether market participants have an obligation to report ‘funny looking stuff that is not socially beneficial,’ Moot said he is not sure that really is the case.”

Powhatan Strikes Back ~ Power (2-14-2015)

Quote: “The Powhatan response takes direct aim at Commissioner Norman Bay, who headed the enforcement office. ‘Communicating with the staff in this matter – even communicating with the former director of enforcement himself, now-Commissioner Norman Bay – has been akin to beating one’s head against the wall.’ Commenting on some of the due process issues raised by the OE report, Powhatan says, ‘There is nothing complicated or ambiguous about this. You don’t have to be a constitutional law professor or claim to be an expert on energy markets to understand the import of the relevant orders here. All you have to do is know how to read.’ Bay is a former constitutional law professor at the University of New Mexico.”

Single Awareness Day, See Page 8 ~ The Friday Burrito (2-13-2015)

Quote: “[W]ho the hell [would] support the federal government taking liberty and property illegally, and especially KNOWINGLY? It is exactly that kind of crap that is at issue.”

Suicide By Cop, Filed By A Decent Firm? ~ The Conglomerate (2-9-2015)

Quote: “…you just don’t see briefs filed by financial businesses against their regulators like the one Powhatan…filed against FERC, abetted by one of Philadelphia’s good law firms.”

Bad Banks, Big Banks and Little Banks: How the FERC works ~ BloombergView (2-9-2015)

Quote: “But Powhatan Energy Fund isn’t JPMorgan, and so after they were accused of exploiting some rules they launched a mad and delightful war against the FERC.”

No Secret Decoder Ring Required! ~ StopPATH WV (2-5-2015)

Quote: “Although weighing in at 49 pages, Powhatan’s response is a quick and easy read, heavy on the common sense, and light on the bafflement that DC lawyers like to rely on to confuse the decision-makers.”

Whither Power Markets? FERC’s Moment Of Truth ~ Forbes (2-5-2015)

Quote: “As far as I know, the Federal Power Act was amended by EPAct 2005 to ensure that conduct in power markets would be subject to precisely the same standard as conduct in securities markets. At least this seems to be what the FERC said when it implemented EPAct 2005 in Order 670.

If the FERC still has any faith in competitive markets, it should act swiftly and decisively to restore confidence in them.”

Hedge Fund Managers Want To Add Potentially Exculpatory Conversation To Their Defense ~ DealBreaker (2-4-2015)

Quote: “What can they say? The Gates twins just love the sound of Joe Bowring’s sonorous, mellifluous voice.”

W. Chester brothers accuse FERC in $30M energy-trading fight ~ Philadelphia Inquirer (2-4-2015)

Quote: “Powhatan’s response, written by William McSwain of Philadelphia’s Drinker Biddle & Reath, called FERC’s complaint ‘a pile of nonsense.'”

Powhatan: FERC staff’s accusations are ‘a pile of nonsense’ ~ SNL Financial (2-3-2015)

Quote: “The official reply of the Powhatan Energy Fund to FERC staff’s accusations that it manipulated the PJM Interconnection LLC power market was as defiant as many of the preliminary responses offered by the fund and its officials.”

PJM: Gates’ Trades Cost Exelon, AEP, Dominion $1M Each ~ RTO Insider (2-2-2015)

Quote: “Bowring says if the trader does not stop the questionable trading, the Monitor would refer the matter to FERC. The trader assures Bowring he has stopped the trading in question.

Bowring concludes the conversation by saying ‘we’re not going to take any further action on this’ but adds he would be approaching PJM and perhaps FERC to discuss changing the market rules.”

Do Juno Snow, See Page 5 ~ The Friday Burrito (1-30-2015)

Quote: “Last week I wrote that this case would set a precedent one way or the other, and that either the agency or the defendants would have serious egg on their proverbial face when it’s over. However, I expected the egg fight to be much later in the process rather than on the burner now.”

When the Market Monitor Calls… ~ StopPATH WV (1-28-2015)

Quote: “How is anyone supposed to know what’s allowed and what’s prohibited? Or do those rules reside only in Bowring’s head? So, keep that recorder handy, just in case… unless you’ve got $30M or so laying around and don’t mind parting with it.”

Powhatan Energy Fund Finds New Evidence, Seeks More Time ~ Vista Today (1-28-2015)

Quote: “Powhatan is alleging Bowring not only did not inform FERC officials of illegal trading activity immediately, as he is obligated to do, but that the FERC withheld knowledge of Bowring’s recording when Powhatan’s lawyers asked for exculpatory evidence last year.”

Gates, Powhatan Say FERC Enforcers Didn’t Share Crucial Info ~ RTO Insider (1-27-2015)

Quote: “‘If this doesn’t count as something under Brady,” [Gates] said, “why even have a Brady policy? What is the purpose?’

In his Senate confirmation hearing in May, Bay — then the director of the Office of Enforcement — said the office adopted the Brady doctrine at his suggestion.

Bay was responding to criticism by former FERC General Counsel William Scherman and other members of the energy bar that the commission has engaged in heavy-handed enforcement tactics. Scherman alleges that FERC officials have failed to abide by the doctrine.”

Citing the discovery of Bowring recording, Powhatan seeks further FERC delay ~ SNL Financial (1-27-2015)

Quote: “The targeted entities said that the recording is of an August 2010 phone call PJM’s independent market monitor, Joe Bowring of Monitoring Analytics, had with a group of energy traders. During that phone call, Bowring allegedly told the traders that he understood why they were engaging in certain suspect trading activity — the same type of trading that subsequently became the subject of FERC’s case against the targeted entities — and that PJM’s market rules needed to be modified to remove the incentive to do so.

Bowring also purportedly told the traders they were not violating any tariff provision, although he asked them to stop engaging in the suspect trading behavior. He then reassured them that if they did so, he would not refer them to FERC’s enforcement staff, the filing said.”

FERC’s Moeller: Commission support for trading may be waning, licensing may be in play ~ SNL Financial (1-21-2015)

Quote: “Moeller said he also thinks Congress should engage in ‘a good thorough discussion’ on how FERC’s enforcement processes could be improved. ‘I don’t fear that discussion and frankly encourage it, and there hasn’t been much because of a lot of other distractions over the past few years … but perhaps that will begin, most likely in the Senate,’ he said.”

What would a PJM market monkey look like? ~ StopPATH WV (1-18-2015)

Quote: “FERC bad-boy Kevin Gates says he’s going to create an animated monkey for his website that explains how to make money in PJM’s badly-designed markets.”

Powhatan’s Gates details how FERC staff’s accusations are ‘simply wrong’ ~ SNL Financial (1-16-2015)

Quote: “…Gates responded by noting that ‘Instead of worrying about my advisory agreement with Alan, [FERC] should work to become less ‘dysfunctional’ and try to do its job properly. They could start by no longer creating markets where monkeys could make money and redirecting their enforcement resources in a productive manner.'”

Powhatan, Chen assail FERC’s show-cause process, want court review ~ SNL Financial (1-14-2015)

Quote: “‘We object to, and oppose, that mangled view of the statutory scheme,’ the parties continued. ‘The statute does not authorize any show cause order process. Nor does it authorize the commission to determine whether any violations occurred.'”

Stakeholder Process Under Attack at FERC Hearing on PJM Financial Trades ~ RTO Insider (1-12-2015)

Quote: “Bowring often found himself alone in defending his views.”

Is There Any Point to PJM Market “Rules”? ~ StopPATH WV (1-9-2015)

Quote: “So, not only is it possible to be guilty of something without actually violating PJM’s rules, it is now also unacceptable to violate new rules that are not yet in effect!”

Bad Eggs, Bad Apples, and Other Things That Stink at FERC ~ StopPATH WV (1-6-2015)

Quote: “In an email to Gates back in 2010, this guy worried that Alan Chen was going to “kill the goose that laid the golden egg,” a badly-designed PJM market product that was profitable for everyone. I think this guy was just watching too much Willy Wonka.”

FERC Issues Order to Show Cause and Notice of Proposed Penalties to Powhatan Energy Fund, LLC ~ AG Speaking Energy (1-6-2015)

Quote: “The Show Cause Order sets off what likely will be a contentious proceeding at FERC — and perhaps later in court — as Kevin Gates, one of Powhatan’s co-owners, has stated that he would ‘rather go bankrupt than settle.’”

Reid’s influence on agencies will linger despite his losing majority leader status ~ SNL Financial (12-29-2014)

Quote: “Of course, FERC and the NRC are independent agencies, and the president ultimately decides who to nominate to fill their seats. But some have suggested that the White House has been relatively disinterested in who gets to sit at those two agencies, which has opened the door for Reid to influence the president’s selections in ways that no Senate majority leader has before.”

2014 FERC Enforcement Year In Review ~ Law 360 (12-22-2014)

Quote: “We expect the next few years to be rather turbulent in the world of FERC enforcement.”

FERC proposes $30M in penalties for Powhatan trading firm ~ Utility Dive (12-22-2014)

Quote: “The company has responded forcefully, putting together a video featuring energy-market experts and releasing previously-confidential documents.”

FERC Issues Show-Cause Order To Powhatan for Alleged Market Violations ~ Bloomberg BNA (12-19-2014)

Quote: “‘We are in the process of reviewing FERC’s order to show cause,’ Richard Gates told Bloomberg BNA Dec. 18.

‘Powhatan anticipates providing a thorough response to the commission to address the [Office of Enforcement’s] allegations. We understand that it has not prejudged OE’s findings and will review the entire proceedings with Powhatan and Dr. Alan Chen.’”

Merry Fercing Christmas, Mr. Gates! ~ StopPATH WV (12-19-2014)

Quote: “Maybe they could spend it hiring some smarter guys to design and monitor their markets… like Gates and Chen?”

FERC Staff Seeks $30 Million Fine in Powhatan Case ~ RTO Insider (12-19-2014)

Quote: “At Thursday’s FERC meeting, Commissioner Phillip Moeller read a statement citing the show cause order and explaining the FERC investigation and enforcement process. Moeller took pains to say the commission has not made any final determinations, comments Gates said he found ‘comforting.’”

FERC staff report alleges trader, funds engaged in fraudulent ‘Up to Congestion’ transactions in PJM energy markets ~ Public Power Daily (12-19-2014)

Quote: “‘Soon after he began receiving MLSA, Chen figured out that the amount of MLSA was relatively predictable and that it could, during periods of high load, be greater than the transaction costs of scheduling UTC trades — costs that were themselves predictable,’ the report alleges.”

Order to Show Cause and Notice of Proposed Penalty ~ Commissioner Moeller Statement (12-18-2014)

Quote: “In the show-cause order, the Commission noted that issuance of the staff report does not indicate Commission adoption or endorsement of staff’s findings. This statement reflects the Commission’s long-standing practice not to pre-judge the findings made in staff reports. Instead, the Commission will consider the entire record in this proceeding to determine whether the assessment of civil penalties is appropriate.”

FERC’s PJM trader, FERC battle over $30mn fine ~ Argus Media (12-18-2014)

Quote: “[Gates] defended Chen and his trades, saying Chen was ‘in the middle of a political war that is destroying his life.’ Chen did not respond to comment.”

FERC proposes to fine Powhatan, others almost $30M for allegedly manipulating PJM’s markets ~ SNL Financial LC (12-18-2014)

Quote: “‘They’ve dragged this investigation out as long as they could so as to not compromise the statute of limitations, and filed this during the holidays,’ Gates said. ‘The trading activity at issue is actually quite simple and it involves very little data. If they actually cared about the integrity of the markets and thought we did something wrong, they should have issued this notice in 2011.'”

FERC Seeks $30M In Manipulation Fines For Hedge Funds ~ Law 360 (12-18-2014)

Quote: “FERC slapped Powhatan Energy Fund LLC and Houlian (Alan) Chen, who made trades for the fund, with a show cause order formalizing enforcement staff allegations they violated the commission’s anti-manipulation rule through so-called up-to-congestion trading in markets administered by regional transmission organization PJM Interconnection in 2010.”

US FERC asks trading firm to respond to market manipulation allegations ~ Platts (12-18-2014)

Quote: “…Gates said that ‘we intend to engage the commission in a professional dialogue and are hopeful that this issue can be resolved outside of a courtroom.'”

SNL Energy’s 10 most influential people of 2014 ~ SNL Financial (12-17-2014)

Quote: “FERC’s enforcement policies came under heavy scrutiny in 2014 in large part due to the efforts of William Scherman, a former FERC general counsel and now an attorney in the Washington, D.C., office of the law firm of Gibson Dunn & Crutcher LLP, who has represented several high-profile targets of that agency’s enforcement efforts.

In an article published in the May 13 edition of the Energy Law Journal, Scherman detailed how the commission’s enforcement process has allegedly become “lop-sided and unfair.”

Powhatan Renews PR Campaign as FERC Readies Enforcement Action ~ RTO Insider (12-9-2014)

Quote: “The Gates brothers have returned to their battle stations.”

FERC May Move Soon on Contentious Hedge Fund Case ~ Politico (12-9-2014)

Quote: “Kevin Gates told ME that they took down the site and declined media interviews because they needed a break and were hoping to focus on other matters. ‘Unfortunately, it seems FERC won’t let us move-on and we will have to continue defending ourselves from their meritless assault,’ he wrote in an email.”

They’re Baaaaaack! ~ StopPATH WV (12-8-2014)

Quote: “Merry flippin’ Christmas!”

OE’s Annual Report, See Page 5 ~ The Friday Burrito (12-5-2014)

Quote: “Since my criticism of FERC’s OE has been pointed and unleashed with a fury over the last year or two, I delved into the report to see what the agency thought of its own work in this area.”

West Chester’s Gates Brothers Finally Get Investigation Of ‘Unfair’ FERC Enforcement ~ Vista Today (11-21-2014)

Quote: “After their public battle against overly “ambitious and misplaced” investigations by the Federal Energy Regulatory Commission in May, West Chester investment managers Richard and Kevin Gates finally have a breakthrough in their own scrutiny of FERC’s enforcement methods.”

DOE Inspector General Opens Investigation of FERC’s Office of Enforcement ~ StopPATH WV (11-20-2014)

Quote: “It’s going to be interesting. Let’s hope we don’t next have an investigation of DOE IG’s investigation to determine whether that investigation was carried out in a fair manner. They could run out of inspectors to inspect each other at some point.”

Federal watchdog to probe agency’s enforcement program ~ E&E Publishing LC (11-19-2014)

Quote: “At the heart of the scuffle was a hedge fund, Powhatan Energy Fund LLC, that publicly fumed over FERC’s investigation of it over accusations that it gamed the energy markets.”

DOE inspector general agrees to probe FERC’s enforcement program ~ SNL Financial LC (11-17-2014)

Quote: “In his Oct. 23 letter to Barrasso that was only recently made public, Friedman did not say which specific aspects of FERC’s enforcement program he will be examining or when that probe will be completed.”

Gates Brothers Giving Up? ~ StopPATH WV (10-27-2014)

Quote: “Just when we were ready to make Kevin Gates an official member of the Sodom on the Potomac Super Hero Club, he’s folded his tent and disappeared.”

Powhatan, FERC Deescalate Regulatory Tiff ~ Vista Today (10-27-2014)

Quote: “Stay tuned to see how the Gates’ either resolve their dispute with big government or end up pleading their case to a judge.”

Gates Bros., FERC Seeking Settlement? ~ RTO Insider (10-26-2014)

Quote: “The hedge fund twins accused of gaming up-to-congestion trades in PJM abruptly ended their public relations campaign against the Federal Energy Regulatory Commission last week, announcing they had taken down their website and would no longer talk to the media or at industry conferences.”

Powhatan goes silent in controversial FERC probe ~ SNL Financial LC (10-24-2014)

Quote: “A small trading company that until now has been very public in defending itself in the face of a FERC investigation has suddenly decided to go quiet.”

FERC’s Bay recuses himself from manipulation probe ~ Argus Media (10-22-2014)

Quote: “Bay’s action comes about two weeks after Powhatan’s attorneys requested the recusal, citing past emails written by Bay that they said showed he had already “pre-judged” whether the trades at issue qualified as manipulative conduct.

Bay in that email said he viewed the facts of the case differently that Powhatan.”

Bay, FERC’s former head prosecutor, recuses himself from controversial investigation ~ SNL Financial LC (10-21-2014)

Quote: “While up until recently that investigation was a nonpublic one, two of the principal officers of one of the targets of the inquiry — Powhatan Energy Fund LLC — took the unusual step of publicly presenting their side of the story well before FERC took any public action. The details of Powhatan’s defensive maneuvers were eventually widely publicized, which led to increased scrutiny of FERC’s enforcement efforts.”

The Powhatan Case Heats Up, See Page 7 ~ The Friday Burrito (10-17-2014)

Quote: “Personally, I fail to understand how Enforcement Staff barrels ahead with blinders when there exists a preponderance of evidence to at least posit reasonable doubt.”

West Chester Investors Escalate FERC Fight ~ Vista Today (09-30-2014)

Quote: “While the Gates’ wrestling match with FERC’s Office of Enforcement is far from over, its hard not to pull for these home-town, home-grown altruists spending their own time, efforts and considerable cash to bring a little common sense and sensibility to how the federal government conducts its business.”

More Senators Question FERC Actions ~ StopPATH WV (09-23-2014)

Quote: “Does FERC’s mindless pursuit of settlements really serve consumers? Or is it all about the occasional big headline to draw the passing attention of the common consumer and give him a false sense of security that regulation is working to protect his interests?

Does FERC play footsie with gigantic utility holding companies?”

Is FERC Harassing You? ~ StopPATH WV (09-14-2014)

Quote: “…the U.S. Department of Energy’s Inspector General would like people who have been harassed by FERC’s Office of Enforcement to contact their office.”

West Chester’s Flash Boys Connection ~ Vista Today (09-01-2014)

Quote: “What readers may not know is their FERC battle is not the first time the Gates twins took on institutional authority and refused to buckle.”

Powhatan Energy Fund Continues Battle With FERC Over Alleged Trading Violations ~ Bloomberg BNA (8-28-2014)

Quote: “Powhatan Energy Fund LLC is ramping up its battle with the Federal Energy Regulatory Commission over market manipulation charges with a filing Aug. 27 requesting internal commission documents related to the case.

The filing, known as a Brady request, seeks any materials that would be exculpatory or reduce any penalty that may be assessed against Powhatan.”

How Reid holds veto power over Obama ~ Politico (08-27-2014)

Quote: “‘His efforts to impose his handpicked choices on the NRC and FERC — to name just two — have politicized what should be policy-based, independent agencies,’ said Murkowski, the top Republican on the Senate energy panel.

GOP strategist and lobbyist Mike McKenna called Reid’s comments about LaFleur especially disturbing. ‘I don’t think it’s terribly healthy that a U.S. Senate majority leader gets himself on the record saying, basically, ‘Hell yeah, I’m hijacking a regulatory agency,’’ he said.

Even among people who support his policies, Reid’s hardball tactics can raise eyebrows.

‘The NRC and FERC appear to be unique in that Reid exerts influence over the selection of chairmen,” said Tyson Slocum, who directs Public Citizen’s energy program and has supported Obama’s FERC nominees. From the standpoint of promoting good government, he said, “I do think that it’s time that Reid hand over his control back to the Senate committee chairs.'”

Don’t Blame Traders for Making Money ~ StopPATH WV (08-17-2014)

Quote: “When a trader buys one of these products they are assuming risk that they may lose their investment. If they lose, should consumers make them whole? Of course not, the trader assumed the risk when he bought the product. But, when they win, people like Mayor Margot Garant think the trader should give the money they made back to the consumers.”

PJM UTC Case Likely Headed to Court After FERC Notice ~ RTO Insider (08-12-2014)

Quote: “One company that engaged in similar trades, Oceanside Power, did go that path, agreeing to settle the charges against it by disgorging profits of $29,563 and paying a fine of $51,000 (IN10-5).

But Gates and Chen refused.”

Powhatan Energy Fund Fires Back At FERC Over Market Manipulation Charge ~ Bloomberg BNA (8-11-2014)

Quote: “Rep. Joe Barton (R- Texas) said he plans to introduce a ‘‘reform package’’ in the next Congress to address complaints that energy market participants are being forced into settlements by FERC.

Congress gave FERC greatly expanded authority over electricity and natural gas markets in the Energy Policy Act of 2005 (Pub. L. 109-58), including the power to impose fines of up to $1 million per violation per day.

‘That authority has been used in a way that many people think has not been normal due process,’ Barton said at a July 29 congressional oversight hearing on FERC policies (146 DER A-1, 7/30/14).

Barton said he wants ‘to put in a reform package to provide more transparency and more of a balanced playing field’ in response to the investigations and enforcement actions that have occurred in the last four years, referring to the tenure of then-enforcement director Norman Bay.”

Gloves are off: FERC issues public notice of alleged violations in Powhatan investigation ~ Lexology (08-08-2014)

Quote: “Powhatan claims that FERC’s investigation violates its due process because prior to FERC OE’s investigation, there was no FERC order or express regulation to put Powhatan on notice that the trades were unlawful. In addition, Powhatan maintains that it entered into the Up To Congestion transactions in an open, transparent manner without concealment or misrepresentation, and that it is not manipulative to take advantage of market flaws.”

FERC Staff Accuses Powhatan Fund Of Violating Market Manipulation Rules ~ Bloomberg BNA (8-7-2014)

Quote: “Bay’s aggressive style as FERC’s market enforcement director over the past four years has created a backlash within the industry and in Congress over perceived ambiguity in FERC’s market manipulation standards.”

FERC Office of Enforcement issues a notice of alleged violation in the Powhatan Energy Fund case ~ Lexology (08-07-2014)

Quote: “As with the Barclays case in U.S. District Court in the Eastern District of California and the Lincoln Paper case in the U.S. District Court in Massachusetts, the resolution of the Powhatan case has significant implications for the future of FERC oversight of energy markets.”

FERC staff issues notice of alleged violations in Powhatan case ~ Lexology (08-07-2014)

Quote: “In this case, it seems unlikely that settlement discussions will be fruitful, given Powhatan’s aggressive posture to date.”

Two In, One Out at FERC ~ StopPATH WV (08-07-2014)

Quote: “Since FERC is all political now, maybe we should just start electing FERC commissioners, since they’re supposed to regulate in the public’s best interests?”

Spotlight-seeking hedge fund gamed markets — staff ~ E&E Publishing (08-06-2014)

Quote: “‘We’re talking to well-known editors and writers of books and movie producers to get them engaged in the story, and hopefully we’ll have it documented for a movie that will memorialize what’s going on here,’ Gates said.”

FERC Alleges PJM Manipulation by Powhatan ~ Energy Legal Blog (08-06-2014)

Quote: “Because this is an alleged violation under the Federal Power Act as opposed to the Natural Gas Act, Powhatan could elect to force FERC to assess a civil penalty and bring a de novo action in federal district court to enforce the penalty as opposed to before a FERC administrative law judge.”

FERC Staff Accuses Powhatan as Bay Moves Up — UPDATE ~ RTO Insider (08-06-2014)

Quote: “Kevin Gates on Tuesday issued a statement vowing to fight the allegations.”

FERC Alleges PJM Manipulation by Powhatan ~ The National Law Review (08-06-2014)

Quote: “Now that the public notice has been issued, we expect a robust response from Powhatan.”

Wellinghoff, others ponder manipulation-case-law ~ Restructuring Today (07-28-2014)

Quote: “…shut up [said Jon Wellinghoff.]”

Senator to U.S.: Please investigate the energy enforcer we just promoted ~ Philadelphia Inquirer (07-22-2014)

Quote: “On July 15, U.S. Sen. Robert Casey, D-Pa., voted with most of his Democratic colleagues and against most of the Republican minority to confirm Norman Bay, head of enforcement for the Federal Energy Regulatory Commission, as the agency’s next chairman.

On July 18, Casey sent a letter to Energy Department inspector general Gregory H. Friedman asking for a seven-point review of FERC enforcement — the group Bay heads.”

At FERC, Uncertainty Remains Despite Norman Bay’s Nod ~ RTO Insider (07-22-2014)

Quote: “When LaFleur congratulated him on his nomination at the commission’s February meeting, Bay betrayed neither a smile nor any sign of appreciation for the gesture.”

Big Win For Utility Status Quo? Mr. Bay Goes To Washington ~ Forbes (07-18-2014)

Quote: “The only thing I can say for sure about Bay is that he is effective at advancing his own interests.”

Capitol Hill buzzes about New Mexican’s ‘unprecedented’ appointment to FERC ~ New Mexico Watchdog (07-18-2014)

Quote: “The only Republican in the Senate who voted for Bay was Sen. Dean Heller, who, like Reid, is from Nevada.”

Harry Reid Gets His Man ~ The WSJ (07-15-2014)

Quote: “The FERC nomination battle has been surrounded by more intrigue than the war of the roses as more people realize that FERC’s ‘independence’ is long gone. Answering to Mr. Reid’s beck and call is as blatant an exposure of this pretense as any. Mr. Bay’s tenure will not be pretty, and an inspector general investigation into his political dealings is richly deserved.”

Senate Confirms Two Obama Nominees to FERC ~ The WSJ (07-15-2014)

Quote: “The agency did not have a statement from Mr. Bay.”

Senate backs 2 nominees to serve on energy panel ~ The Daily Local News (07-15-2014)

Quote: “Senate Minority Leader Mitch McConnell, R-Ky., was one of several Republicans who said Bay is not qualified to lead the commission.

‘I fail to see what qualifies Mr. Bay to be the chairman of the commission, especially when the acting chair of FERC whom he would displace is much more qualified to hold the position,’ McConnell said.”

Hudson Valley of the Dolls ~ The WSJ (07-13-2014)

Quote: “The nomination must be of particular interest to Mr. Schumer, aka the Senator from Wall Street, given the many financial reputations Mr. Bay has ruined with bogus ‘market manipulation’ charges.”

Senate leader Reid steers push to turn Nevada into renewable energy mecca ~ The Pittsburgh Tribune-Review (07-12-2014)

Quote: “Senate Majority Leader Harry Reid’s dream of masterminding the Saudi Arabia of renewable energy in the Nevada desert seems so close that not even the membership of a little-known federal agency can be left to chance.

The Democrat’s interest in the Federal Energy Regulatory Commission starts with his desire to grow the renewable energy industry in his home state, experts said.”

Keep an eye on FERC’s market influence ~ The News Journal (07-11-2014)

Quote: “Sadly, I come again describing another very troubling matter affecting our markets. My concern is the Federal Energy Regulatory Commission, an agency that oversees the interstate transmission of electricity, natural gas and oil.”

Molinaro: FERC ‘impervious’ to scrutiny, must be held accountable ~ Poughkeepsie Journal (07-03-2014)

Quote: “‘This abuse of Dutchess County residents is appalling,’ Molinaro wrote. ‘In the twenty years I have held elected office at the local, county and state level I have never interacted with a less accessible, less accountable government entity, seemingly impervious to legislative and public scrutiny.'”

FERC Commissioner Norris expects not to seek another term ~ SNL Financial LC (06-30-2014)

Quote: “Coming out from what he called “the land of dysfunction,” Norris urged the WPTF audience members to contact their local congressional delegates to put pressure on what he sees as “raw political power moves” involving the FERC chairmanship.”

Harry Reid’s Personal Prosecutor ~ The WSJ (06-22-2014)

Quote: “Mr. Reid is moving with unusual dispatch because many Democrats are scrutinizing Mr. Bay’s record of prosecutorial abuse as the head of FERC’s enforcement office.”

Gates Twins Waive Privacy Rights, Ask For Transparency ~ Vista Today (06-20-2014)

Quote: “The volume of information on the web site containing many documents and video testimonies, as well as the request to FERC for public disclosure has given the twin Gates brothers national attention. They’ve become symbols for a backlash against what some business observers say is bullying by a government regulatory agency.”

‘Flash Boys’ fund manager says power markets, not equities, need the most fixing ~ Marketwatch (06-19-2014)

Quote: “‘It’s amazing to me that the equity markets are getting so much attention [as] being problematic and unfair, where I think they are moving forward,’ [Gates] says. ‘What’s happening in the energy markets is that they are moving backwards at a high rate of speed.’”

The Tale of the Immigrant and the Federal Energy Regulatory Commission ~ National Review (06-19-2014)

Quote: “In support of Bay’s nomination, a former chairman of the committee, Senator Pete Domenici (R., N.M.) testified that Bay “typifies the American dream.” You have to wonder what such praise sounds like to eleven-year-old Jessica Chen.”

On eve of Senate panel vote, commissioner frets over agency’s politicization ~ E&E Daily (06-18-2014)

Quote: “Senate Majority Leader Harry Reid’s (D-Nev.) decision to get involved in choosing the Federal Energy Regulatory Commission’s next chairman is creating “dysfunction” at the agency and threatening its ability to function properly, a member of the commission said yesterday.”

Powhatan Energy brothers take stand against federal regulators on futures trades ~ The Washington Times (06-17-2014)

Quote: “Mr. Obama wants to designate Mr. Bay as FERC chairman, which would mean demoting Cheryl LaFleur. The acting chairwoman is a Democrat who has won solid reviews from both sides of the aisle. Some Republican strategists wonder why Mr. Obama would demote a qualified woman to replace her with a less-qualified man.”

West Chester Energy Fund Won’t Flinch In Their Fight With Washington ~ Vista Today (06-17-2014)

Quote: “‘We’re happy about it,’ Rich Gates said about the positive attention. ‘When we made the web site public, we just said ‘let’s let it rip and see what happens’ because nothing like this had ever been done before.'”

Landrieu Scrambles on Eve of Busy Committee Meeting ~ The WSJ (06-17-2014)

Quote: Senate Majority Leader Harry Reid (D., Nev.), has insisted that Norman Bay be chairman of the commission, and Cheryl LaFleur, FERC’s acting chairman, be demoted back to commissioner.”

Senate Energy Committee set to vote on FERC nominees ~ Washington Examiner (06-12-2014)

Quote: “Much of the insistence on Bay has come from Reid. He told the Wall Street Journal recently that Obama passed over LaFleur, ‘Because I don’t want her as chair.'”

Conrad G. Lucas II: Regulate energy, no experience necessary ~ Charleston Daily (06-12-2014)

Quote: “Sen. Joe Manchin recently asked Norman Bay: ‘Mr. Bay, you have no direct experience in regulation of energy infrastructure or markets. ‘The previous five chairmen all had more than 20 years of experience in the energy industry and as regulators before becoming chairman. Was Congress wrong when it previously required experience as a prerequisite for this position?'”

Going Public ~ Politico (06-12-2014)

Quote: “A lawyer for Kevin and Rich Gates, the twin hedge fund brothers fighting allegations from FERC’s enforcement office, have asked the agency to effectively unseal their case and permit enforcement director Norman Bay to discuss their case publicly.”

Rep. Cassidy presses Landrieu to reject FERC nominee ~ The Hill (06-12-2014)

Quote: “Landrieu said she is keeping her eye on the ball to ensure commissioners that can get the job done well are confirmed, but said nothing has been decided on a possible deal to nominate LaFleur as chairwoman and Bay as a commissioner.”

Support Wanes for Obama’s FERC Nominee ~ The WSJ (06-11-2014)

Quote: “By Tuesday, it became clear that even some of the panel’s Democrats didn’t support Mr. Bay as chairman of the five-member commission, due in large part to his lack of experience in the energy industry and as a regulator.”

Either Norman Bay or a Former FERC General Counsel Is Lying, and the Senate Should Find Out before It Proceeds with Bay’s Nomination to Chair FERC ~ GlobalWarming.org (06-11-2014)

Quote: “So, a prominent person is lying. Either former FERC General Counsel William Scherman is telling fibs about FERC’s Office of Enforcement, or current FERC chair nominee Norman Bay is being duplicitous in rebutting the allegations.”

Despite Reid’s stated preference, senators float plan to make LaFleur chairwoman ~ E&E Publishing (06-11-2014)

Quote: “Republicans, in the meantime, have repeatedly questioned why President Obama would demote a ‘very capable woman’ by not asking LaFleur to stay on as chairwoman — a potential counter to Democrats’ political attacks attempting to paint the GOP as unresponsive to women’s concerns.”

Negotiations Reported as Senate Committee Vote on FERC Nominees Stalls ~ Natural Gas Intelligence (06-11-2014)

Quote: “‘There is an ongoing negotiation and nothing has been decided, but I am really keeping my eye on the ball, which is getting us a good compliment of FERC commissioners that can do the job and do it well,’ Landrieu said in an article in The Hill Wednesday.”

Confusion Over FERC Rules Will Remain After Powhatan ~ Law 360 (06-11-2014)

Quote: “The outcome likely will result in yet more mixed signals regarding what market participants may or may not do when following the existing rules. This adds further risk to market participation.”

GOP Remains Skeptical on Bay Nomination ~ RTO Insider (06-10-2014)

Quote: “Scherman’s critique was laid out in detail in an article in The Energy Law Journal, and summarized in an op-ed in The Wall Street Journal, days before Bay’s confirmation hearing.

In his written responses, Bay provided a more forceful rebuttal than he mounted during the in-person questioning.”

OVERNIGHT ENERGY: Senators play FERC musical chairs ~ The Hill (06-10-2014)

Quote: “‘Sen. Landrieu and I are trying to figure out if there is a way that the most qualified individual on the commission will be chair,’ Murkwoski said. ‘We are in the mist of those discussions now.’”

Senators discussing deal to nix Obama’s FERC nominee ~ Washington Examiner (06-10-2014)

Quote: “Energy industry insiders say Reid pushed the White House to overlook FERC Commissioner John Norris, whose wife ran Obama’s re-election campaign in Iowa, and instead appoint former chief Colorado utility regulator Ron Binz, who withdrew from consideration in October.”

Harry Reid Shapes Energy Regulator With an Eye to Nevada Industry ~ The WSJ (06-08-2014)

Quote: “‘I don’t want her as chair,’ Mr. Reid said during a recent interview in his Washington office.”

BAY WATCH — FERC NOMINEE ANSWERS COMMITTEE QUESTIONS ~ Politico (06-06-2014)

Quote: “…it seems like all the hot-button issues are there in some form: Bay’s experience and enforcement work, EPA regulations, Order No. 1000, acting Chairwoman Cheryl LaFleur, and grid reliability.”

Obama’s pick to lead FERC fends off critics, piques more questions ~ E&E Publishing (06-06-2014)

Quote: “Murkowski in her questions probed Bay’s work in March 2012, when he signed a consent agreement with a subsidiary of Constellation Energy Group — an entity that was also participating in merger proceedings before FERC at the time. The senator asked Bay about the settlement agreement he signed on March 8 and its relation to the merger, which was approved the next day. Murkowski asked if Bay is concerned about the appearance of a “quid pro quo” in connection with the two documents.”

West Chester Fund Managers Launch Anti-Big Government Bullying Foundation ~ Vista Today (05-31-2014)

Quote: “The Pufferfish Foundation, the Gates brothers told prospective supporters in an email, will “focus on transparency, accountability and justice. It’s expected that Pufferfish may direct its initial resources with a keen focus on the FERC Office of Enforcement.”

Chester County energy traders watch D.C. hearings with interest ~ Main Line Suburban Life (05-29-2014)

Quote: “Last week’s Senate Energy and Natural Resources Committee hearings in Washington, D.C., drew particular interest from Chester County energy traders Richard and Kevin Gates, officers and part owners of Powhatan Energy Fund LLC who attended all of the proceedings.”

Norman Bay Should Not be FERC Chairman ~ Power (05-28-2014)

Quote: “However the nomination came to pass, it is a mistake. Norman Bay, who is smart and talented, with a fine record as a U.S. Attorney in New Mexico (and a questionable record as FERC’s top cop) is the wrong choice to sit on the FERC and, even more, the wrong choice to be its chairman.”

Chester County Investors “Exhibit A” In FERC Confirmation Dispute ~ Vista Today (05-28-2014)

Quote: “The story of West Chester twin investors Kevin and Richard Gates was cited as Exhibit A in a U.S. Senate confirmation hearing in Washington DC last week that the RTO Insider said left Federal Energy Regulatory Commission appointee Norman Bay ‘bruised.'”

A Failure Of Due Process At FERC ~ Forbes (05-27-2014)

Quote: “In the days since the article was published, we have received numerous emails and calls from industry folks and practitioners alike applauding the article and thanking us for bringing these issues out into the open. We appreciate that support, and hope that the timing of the article does not deflect from the fact that the enforcement process needs reforms. And soon.”

Chester County energy traders watch D.C. hearings with interest ~ Daily Local News (05-27-2014)

Quote: “To that end, they took the unusual step of creating a website to gain public attention and support for their case and to reassure their customers they are in the right and that the commission is wrong. Since that time their case has drawn much attention from national media, which by and large has sided with the Gateses.”

Let’s Get ‘Metaphysical’ A federal court slaps down an Obama regulator’s legal abuse ~ The WSJ (05-23-2014)

Quote: “The D.C. Circuit thunderclap could help restore the old nonpolitical FERC, but so would a Chairman with more fidelity to the law than Mr. Bay.”

Gates Brothers Test Telekinesis at FERC Confirmation Hearing ~ StopPATH WV (05-21-2014)

Quote: “There’s even a photo…Go see the picture for yourself!”

Follow-up Questions for FERC’s Norman Bay ~ Institute for Energy Research (05-21-2014)

Quote: “Conveniently for Bay, the most public and most egregious case of abuse within his Office of Enforcement, the case against brothers Kevin and Richard Gates and their energy venture (Powhatan Energy Fund), was off-limits for comments from Bay because it is an ongoing investigation. The story is a nightmare for FERC.”

Accountability At FERC: Bullies Deserve The Boot, Not Promotions ~ Forbes (05-21-2014)

Quote: “A few Democratic Senators sought to deflect criticism away from Bay’s running of the Office of Enforcement by suggesting that to the extent there were any due process problems, it was the Commission, and not Bay, who made all the decisions currently being criticized.

Turns out that is just not accurate.”

Analysis: LaFleur Cruises, Bay Bruises in Confirmation Hearing ~ RTO Insider (05-21-2014)

Quote: “When Bay stood up to be sworn in, Richard and Kevin Gates — the twin hedge fund managers whose case Scherman cited as exhibit A — were sitting in the row behind him. Richard was on camera, over Bay’s shoulder, during the entire two-hour hearing.”

Sen. Murkowski asks FERC nominees Bay and LaFleur about media assertions ~ Energy and Natural Resources Commmittee (05-20-2014)

Quote: “The suggestion is that it is bullying or perhaps worse.'”

Lawmakers Scrutinize Nominee to Head Federal Electricity Regulator ~ The WSJ (05-20-2014)

Quote: “‘It’s one thing to be the tough cop on the beat,’ said Sen. Lisa Murkowski (R., Alaska), the top Republican on the Senate Energy and Natural Resources Committee. ‘It is quite another to make the rules up as one goes and deny those under investigation basic due process rights.'”

Not Going To Take It Anymore: Two Investors Battle Federal Energy Regulators In Public ~ Forbes (05-20-2014)

Quote: “[The website] also includes videos with comments from the industry experts, as well as their written analysis. These experts read like a Who’s Who of energy and securities law.”

PhillyDeals: Brothers rack up miles in a fight against the fed ~ Philadelphia Inquirer (05-20-2014)

Quote: “In Bay’s current job as FERC’s enforcement director, they say, he has overseen a years-long investigation of the brothers’ Powhatan Energy Fund L.L.C. for possible misdeeds regarding trading payments on the Norristown-based PJM Internconnection electricity market. They and their experts insist they played by the rules.”

Opinion: Energy Bureaucrats on the Warpath ~ The WSJ (05-19-2014)

Quote: “Editorial page editor Paul Gigot on Federal Energy Regulatory nominee Norman Bay’s aggressive prosecutorial tactics–and what he could do to your electricity bill.”

Mugged by the State: When Regulators and Prosecutors Bully Citizens ~ Cato Institute (05-19-2014)

Quote: “Even when there is no infraction, it can be financially ruinous to mount a legal defense against powerful agencies that seem bent on coercing a plea deal or settlement.”

Fighting FERC Fraud Claims in Public ~ Cato Institute (05-19-2014)

Quote: “Kevin and Rich Gates are fighting claims of fraud by the Federal Energy Regulatory Commission, and they’re doing so in broad daylight.”

Will twin West Chester investors derail Obama’s FERC boss pick? ~ Philadelphia Inquirer (05-19-2014)

Quote: “Some of President Obama’s fellow Democrats are balking at the chief executive’s selection of Federal Energy Regulatory Commission enforcement chief Norman Bay to head the agency, on the eve of Senate hearings to review and confirm or reject the appointment.”

America’s New Energy Prosecutors ~ The WSJ (05-18-2014)

Quote: “Having represented dozens of clients under investigation by FERC, we know the Gateses’ experience is the tip of the iceberg.”

Electric Prosecutor Acid Test ~ The WSJ (05-18-2014)

Quote: “Yet when these incentives change behavior and FERC deems the profits too high, or something, Mr. Bay’s team levels selective, subjective, ad hoc allegations of fraud. For Mr. Bay, obeying FERC’s own tariffs counts as market manipulation.”

Obama’s FERC problem isn’t going away ~ The Hill (05-18-2014)

Quote: “It all started after the 2008 financial crisis, leading to strong dislike for the culture on Wall Street. But the Gates brothers argue FERC has gone too far, and Bay is the one at the helm.”

Investment Firm’s Legal Battle with FERC ~ Platts Energy Week TV (05-18-2014)

Quote: “Senior Correspondent Chris Newkumet will interview one of the defendants, Kevin Gates, vice president of the managing member, Powhatan Energy Fund.”

Anonymous Letter to the Editor, See Page 9 ~ The Friday Burrito (05-16-2014)

Quote: “Thus, when the Gates brothers said ‘I’m as mad as hell, and I’m not going to take this anymore!’ it struck a chord in a lot of us who are hoping that these guys will reintroduce FERC to the concept of humility. FERC has become a bully and it is great to see these guys refusing to hand over their lunch money. Perhaps a FERC that realizes it is not always right is a better commission.”

The FERC Enforcement Process: Time for Structural Due Process and Substantive Reforms ~ Energy Law Journal (05-13-2014)

Quote: “And, while most members of the regulated community and practioners within the energy bar are reluctant to say so publicly, there is a wide-spread view that the FERC enforcement process has become lop-sided and unfair.”

E & E Daily’s Northey discusses confirmation hurdles for Obama’s pick to lead agency ~ E&E TV (05-09-2014)

Quote: “Monica Trauzzi: There’s a hedge fund making the rounds with the press; I know we’ve both spoken to them. They’re also talking to folks on the Hill raising some questions about Bay’s work at the Office of Enforcement. Is that the kind of thing that might cause some fireworks during this hearing?

Hannah Northey: I definitely think it’s going to be brought up. It’s the Powhatan Energy Fund LLC. It’s run by Kevin and Rich Gates out of Pennsylvania.”

If You Have a FERC Problem, Maybe Don’t Hire a FERC Lawyer ~ Above The Law (05-08-2014)

Quote: “The FERC bar, as I understand it, is a bit insular. Like so many insular regulatory bars, folks work at the agency for a while, then move into private practice, and maybe go back to the agency if a plum enough position opens up. Professionally, you swim in the same water with folks at the agency.”

FERC’s Prosecutorial Tactics ~ Cato Institute (05-07-2014)

Quote: “By taking their case public and fighting back, the Gates brothers may not only win their case, but might establish some favorable legal precedents that will help others in the future. And for that, they deserve our thanks.”

With confirmation hearing set, Obama’s pick to lead agency faces uncomfortable questions ~ E&E Daily (05-07-2014)

Quote: “Gates said Powhatan Energy Fund has made an attempt to contact every senator on the ENR Committee since it first launched a campaign in March to defend itself from FERC’s investigation for manipulation (E&ENews PM, March 3).

‘We’ll talk and meet with anyone and everyone who will speak with us,’ he said. ‘There are a lot of members who are interested and aware, not just of our case but of the FERC Office of Enforcement, in general.'”

Did Obama’s New FERC Nominee ‘Criminalize’ Energy Regulation? ~ Forbes (05-06-2014)

Quote: “If Powhatan’s experience is any indication of FERC’s anti-manipulation enforcement policies, the political risks of participating in wholesale power markets are approaching Hugo Chavez-scale proportions.”

As the Obama Era Ages, Scapegoating Mounts ~ Forbes (05-05-2014)

Quote: “The sages are the Philly traders, who have to explain to the regulators that they do not grasp their own rules.”

The Investors at War With Political Power ~ The WSJ (05-02-2014)

Quote: “Yet FERC doesn’t seem to understand the difference between a wash trade and a washing machine.”

Terrible Twins Challenge FERC on Enforcement Policies ~ Power (04-22-2014)

Quote: “There is no doubt of the cleverness of the Gates boys.”

FERC, CFTC Reject Due Process Complaints ~ RTO Insider (04-15-2014)

Quote:  “‘As we know transparency can be generally a good thing,’ Gasteiger added. ‘Unless you’re the subject of the transparency and then it becomes an issue.'” 

Obama’s Latest FERC Nominee May Have Problems ~ Power (04-14-2014)

Quote:  “The nomination of Norman Bay, the Obama administration’s latest pick to join the Federal Energy Regulatory Commission and become its chairman, may be in serious jeopardy.” 

Twin Energy Traders Dare the FERC to Sue Them ~ Bloomberg View (04-11-2014)

Quote:  “The Gates twins are, or ought to be, legends of feistiness.” 

‘Flash Boys’ investors step up fight against U.S. enforcer ~ Philadelphia Inquirer (04-11-2014)

Quote:  “‘The government wields tremendous power when they swing around the charge of market manipulation,’ Rich Gates told Bloomberg. Going public ‘was an insurance policy against our personal and professional reputations,’ added Kevin Gates.” 

Hedge fund takes aim at FERC nominee Bay ~ POLITICO Pro (04-10-2014)

Quote: “‘To be clear, this isn’t a fight we started,’ Kevin Gates said in an email to POLITICO Thursday. ‘But, given this is the situation we are in, we felt a civic and moral responsibility to expose FERC Office of Enforcement’s practices which are unfair and un-American.'”

Hedge Fund Twins Stage Campaign Against Energy Regulator ~ Bloomberg (04-10-2014)

Quote:  “Bay, 53, declined to comment through a FERC spokeswoman, Mary O’Driscoll. O’Driscoll said the agency can’t confirm or deny an investigation is under way.” 

PhillyDeals: The struggle between private financial firms and government ~ Philadelphia Inquirer (03-09-2014)

Quote: “They had checked Chen’s strategies and were sure they conformed to FERC and PJM rules.”

Hedge Fund Launches Website to Defend Itself From FERC Probe ~ Natural Gas Intelligence (03-04-2014)

Quote: “The website also contains nine position papers obtained by Powhatan after the hedge fund learned that FERC might take the case public.

‘These nine expert opinion papers have not been delivered to OE because it only gave us 45 days to respond to its preliminary findings,’ Powhatan said. ‘Despite having most of our materials for over a year, OE made it clear that they would not grant us additional time to respond. So we simply could not get the additional expert opinions completed before our response was due.'”

PJM Trader Calls FERC on Manipulation Probe ~ RTO Insider (03-03-2014)

Quote: “After three and a half years in FERC’s crosshairs, the Gates brothers have had enough.”

Small trading operation in FERC’s enforcement crosshairs takes pre-emptive defensive action ~ SNL Financial LC (03-03-2014)

Quote: “While FERC apparently has yet to decide whether its investigation into the actions of several relatively small trading operations indicates that sanctions should be pursued, one of the targets of that investigation has taken the unusual step of going public about the probe in order to present its side of the story.”

Recent FERC Settlements Could Unravel Power Markets: Hogan ~ Breaking Media, Inc. (10-31-2013)

Quote:  “FERC is endangering the functioning of power markets across the country by extending its definition of market manipulation in ways that are ‘extremely dangerous’ and could ‘unravel the entire power market’ Kennedy School of Government professor of Global Energy Policy William Hogan told the Platts Nodal Trading Conference in a keynote address this week.” 

Texas Knows Something About Regulating ‘Wild West Markets’  ~ The WSJ (10-25-2013)

Quote:  “Right now FERC has been employing an enforcement policy that William Hogan, a professor of global energy policy at Harvard University says is similar to former Supreme Court Justice Potter Stewart’s famous line regarding pornography: ‘I know it when I see it’ – an approach that’s left many traders bewildered and guessing as to what is permissible and what isn’t.”

PJM Files Tariff Changes at FERC Aimed at Blocking Marginal Loss Gaming ~ Platts (08-26-2010)

Quote:  “‘The purpose of the filing is to change the rules to prevent the behavior.  Gaming implies someone is doing something that may be within the rules in order to achieve a benefit that the rules did not intend,’ PJM spokesman Ray Dotter said in a response to the question why PJM is not asking for a refund.” 

Notice of Motion and Motion for Leave to File Brief of Amici Curiae Administrative Law Professors ~ United States District Court Eastern District of California (11-7-2016)

Quote: “Administrative law professors Jeffrey S. Lubbers; William Funk; Jonathan H. Adler; Emily Hammond; Michael Herz; Linda Jellum; William S. Jordan, III; Harold J. Krent; Don LeDuc; Ronald M. Levin; Nathan A. Sales; and Louis J. Virelli III respectfully move this Court to grant them leave to file a brief as amici curiae in connection with the Motion to Affirm Civil Penalties (ECF Dkt. No. 136) filed by plaintiff Federal Energy Regulatory Commission (“FERC”).”

Court Order Accepting Filing from 12 Administrative Law Professors ~ United States District Court Eastern District of California (11-7-2016)

Quote: “IT IS ORDERED that the Motion of Amici Curaei Administrative Law Professors Jeffrey S. Lubbers, William Funk et al. to file a brief as amici curiae be and it hereby is GRANTED, and it is FURTHER ORDERED that amici’s proposed brief shall be deemed filed in this action.”

Proposed Brief of Amici Curiae Administrative Law Professors ~ United States District Court Eastern District of California (11-7-2016)

Quote: “Amici have grave concerns about the legal and policy implications of FERC’s apparent view of what constitutes a district court’s ‘de novo review’ of an agency’s civil penalty assessment. “

Opinion Ordering FERC to Pay Attorney’s Fees ~ United States District Court for the District of Columbia (10-5-2016)

Quote: “And the brothers intended to disclose more, having filed the FOIA requests at issue in this lawsuit. Id. This media coverage — even if drummed up by the litigants themselves — demonstrates significant public interest in this action. “

Vaughn index ~ Energy & Environment Legal Institute v. Federal Energy Regulatory Commission (3-16-2015)

Quote: “January 12, 2012 emails between James Pederson, Michael McLaughlin, Anna Cochrane, Michael Bardee, David Morenoff, Norman Bay, and Larry Gasteiger re timeline for acting on the Constellation/Exelon merger.”

Memorandum in Support of Motion for Summary Judgment ~ Energy & Environment Legal Institute v. Federal Energy Regulatory Commission (3-16-2015)

Quote: “Plaintiffs’ FOIA request specifically sought ‘copies of all emails’ sent or received between January 1, 2012 through May 31, 2012 by the then-Chairman, Mr. Wellinghoff, and the then-director of the Office of Enforcement, that including in their ‘Subject field’ or ‘body’ the terms ‘Constellation’ or ‘Exelon’, and ‘approve’, ‘merge’ (which also included ‘merger’), ‘consent’, and/or ‘settle’ (which also included ‘settled’ and ‘settlement’).”

FERC’s Responsive Documents ~ Energy & Environment Legal Institute v. Federal Energy Regulatory Commission (2-9-2015)

Quote: “This is good. Thank you Norman.
Jon “

FERC Cover letter ~ Energy & Environment Legal Institute v. Federal Energy Regulatory Commission (2-9-2015)

Quote: “Enclosed are responsive documents responsive to your…request…”

FOIA Court Order ~ STS ENERGY PARTNERS LP, Plaintiff, v. FEDERAL ENERGY REGULATORY COMMISSION, Defendant (3-4-2015)

Quote: “Upon consideration of the government’s motion for summary judgment, plaintiff’s motion to strike and cross-motion for summary judgment…it is hereby ORDERED…”

FOIA Court Decision ~ STS ENERGY PARTNERS LP, Plaintiff, v. FEDERAL ENERGY REGULATORY COMMISSION, Defendant (3-4-2015)

Quote: “Moreover, the Court will require FERC to provide additional, more specific information to justify its withholding of the 142 disputed documents in support of a renewed summary-judgment motion. A separate Order has issued on this date.”

C’mon, PJM. Our beef has been with FERC Enforcement. Not you. Well, not until your recent shenanigans. ~ Powhatan Energy Fund Announcement (2-10-2015)

Quote: “PJM made the rules, and Alan traded under those rules. Our activities were perfectly legal. And the thing is – PJM knows it.”

Bryan Hansen’s Responses to Data Request ~ Bryan Hansen, former partner of Bob Steele who FERC references in its Order to Show Cause, sides with Powhatan’s 12 Independent Experts (12-08-2014)

Quote: “No.  I do not agree that this activity was “rank manipulation”. As stated above, it is my opinion that it is not market manipulation to profit from flaws in the design of the energy markets.”

Data Request to Bryan Hansen ~ Letter sent by James Owens and Samuel Backfield (11-19-2014)

Quote: “Do you agree with Steele that “most UTC participants (myself and Conectiv included) perceived this as rank manipulation of the intended market function and had enough sense not to participate is this activity”? Why or why not?.”

Cover Email to Bryan Hansen Data Request ~ Email sent by James Owens (11-19-2014)

Quote: ” As noted, we believe that you are a material eyewitness to certain events of that summer, and we have no reason to believe that you or your partners engaged in any of the conduct implicated in this investigation.”

Powhatan – Open Discussion ~ Platts Nodal Trader Conference (10-08-2014)

Quote: “The information in this presentation is not confidential and should be shared with everyone you know because it’s important and it’s time to open things up.”

Risk Hedging vs. Manipulation ~ Platts Nodal Trader Conference (10-08-2014)

Quote: “US equity markets are good, and getting better.”

Nodal Trading and Hedging Outlook ~ Platts Nodal Trader Conference (10-08-2014)

Quote: “Natural Gas trading and open interest on ICE is down measurably from previous years!”

Quote: “Liquidity in Power contracts has decreased significantly since 2011”

Quote: “Market activity has declined substantially for power spreads since the first quarter of 2012”

Quote: “Financial participants are essential for the power market to function”

Quote: “How much financial trading volume is needed can be gauged by looking at other efficient markets. Power has a long way to go!”

Norman Bay’s Statement of Interest for Deanship (when Binz was nominated) ~ University of Montana School of Law (09-15-2014)

Quote: “As a result of our enforcement actions, FERC has developed an international reputation as an effective and energetic agency. The Financial Times has described FERC as ‘a small but potent regulator.’ Gregory Meyer, JP Morgan at Centre of U.S. Power Market Probe, FINANCIAL TIMES, July 3, 2012. Similarly, Reuters has reported that ‘FERC’s Office of Enforcement, run by Norman Bay, has stepped up its game lately, taking the lead among regulators in cracking down on trades that cross both physical and financial markets.’ Scott DiSavino and David Sheppard, JP Morgan Probed over Possible Power Market Manipulation, REUTERS, July 3, 2012. Similar comments have appeared in the New York Times and Wall Street Journal. See Ben Protess and Michael J. de la Merced, An Energy Regulator vs. Wall Street, NEW YORK TIMES, Nov. 2, 2012; Ryan Tracy, Clashes Coming on Energy Trades, WALL STREET JOURNAL, Nov. 19, 2012. Congress has noticed as well. Senator Maria Cantwell issued a press release on November 16, 2012 in which she publicly praised FERC. In a Reuters interview, she gave FERC an “A” for its enforcement activity and said that she has changed from being one of FERC’s “most fervent critics” to becoming a ‘fan.'”

Letter to Inspector General from Sen Collins and Sen Barrasso, with attachments ~ (09-12-2014)

Quote: “We write to ask you to determine facts related to allegations surrounding the Federal Energy Regulatory Commission’s (FERC) enforcement program with respect to fairness and transparency.”

Corrections/Editor, New York Times ~ Professor Wolak, Stanford University (08-16-2014)

Quote: “Competition among traders provides strong incentives for them to serve the interests of consumers.”

Black Oak Vaughn Index ~ FOIA, STS Energy Partners LP v. FERC, (07-28-2014)

Quote: “September 25, 2008 email from Larry Gasteiger including edits to a draft Black Oak order in EL08-14-001.”

Letter to Inspector General ~ Kevin Gates, Officer of Managing Member, Powhatan Energy Fund LLC (07-24-2014)

Quote: “Please consider me as a resource who wants to help you in any way that I can. Thanks in advance for your time and consideration.”

Request to Inspector General, The Honorable Gregory Friedman ~ Senator Casey (D-PA) (07-18-2014)

Quote: “I want to ensure that FERC is properly and fairly conducting investigations and taking enforcement actions.”

Electricity Markets: Growing Pains or Mid-life Crisis? ~ WCEE (07-16-2014)

Quote: “Instead of the law, we are talking about other things. Why?

Today, for instance, we are talking about “social value”, a term not found in a tariff, the governing law, or FERC’s charges against Powhatan.
− What does it even mean?
− Highly subjective and causes arbitrary enforcement and prosecutorial abuse.”

FOIA Production ~ FERC, Office of External Affairs (06-19-2014)

Quote: “The Chairman would like the position filled by a career SES member.”
Quote: “FERC’s Chairman determined that the Director of OE needed to be filled by a career SES member.”
Quote: “Mr. Bay’s appointment to this particular position is against regulation and, as a result, I must deny your request.”

FERC cover letter for FOIA request to Energy and Environmental Legal Institute ~ FERC, Office of External Affairs (06-19-2014)

Quote: “Enclosed are redacted documents responsive to your October 2, 2013 request (FY14-1), filed pursuant to the Freedom of Information Act (FOIA)…”

Dr. Shaun Ledgerwood’s opinions will be added to this site. ~ Powhatan Energy Fund Announcement (01-10-2014)

Quote: “As a former economist and attorney for the Office of Enforcement for the Federal Energy Regulatory Commission, he evaluated manipulative behavior within and across wholesale electricity and natural gas markets.”

Deposition transcript of Richard Tabors, PhD ~ Federal Energy Regulatory Commission (05-14-2012)

Quote:
“Q: Can you describe that?

A: I looked at the cross-correlations between the prices at — that were clearing prices at the nodes that he traded at.

Q: I’m sorry. You looked at the cross-correlation of the prices at the nodes that he traded at? What does “cross-correlation” mean?”

Deposition transcript of Richard Wallace, Esq. ~ Federal Energy Regulatory Commission (05-14-2012)

Quote:
“Q: Were you familiar with equities cases that were like that in your experience at FINRA and the Securities and Exchange Commission?

A: Like that?

Q: In the sense that there would be a loss on a trade versus then having — for example, how there was lost money on the P&L but made $713,000 in TLC, that kind of a transaction, were you familiar with those in the equities markets?

A: Well, in my affidavit, I talk about trading where one of the key components is rebates, trade or tape rebates, liquidity rebates, other kinds of rebates that go into the market participant’s overall decision on whether or not to trade.”

Deposition transcript of Chao Chen, PhD ~ Federal Energy Regulatory Commission (05-08-2012)

Quote:
“Q: All right, sir. And your understanding is these rebate mechanisms exist, are created by the markets in order to promote liquidity?

A: They are created by the markets, and why exactly they do, I can’t say.”

Deposition transcript of Richard Gates, #2 ~ Federal Energy Regulatory Commission (05-08-2012)

Quote:
“Q: And had there been any indication that you might be called for a deposition at the time you were having this conversation?

A: No. We were very, very surprised when I was called for a deposition.”

Deposition transcript of Richard Gates, #1 ~ Federal Energy Regulatory Commission (05-07-2012)

Quote:
“Q: And then so you were aware that people went to prison as a result of the Enron trading?”

Deposition transcript of Gregory Sekelsky ~ Federal Energy Regulatory Commission (05-07-2012)

Quote:
“Q: Did you regard — did you have any views on the volatility of energy trading?

A: I just viewed that it, you could lose money, you could make money, just that it is was highly volatile”

PJM Options to Address FTR underfunding ~ PJM (04-30-2012)

Quote: “For these reasons, PJM’s current allocation of the marginal loss revenue surplus is intentionally arbitrary and therefore a windfall to those who receive it. Accordingly, PJM believes that combining the marginal loss surplus with balancing real-time congestion costs would apply funds resulting from the over collection of marginal losses more logically and efficiently than the relatively arbitrary present dispersion of marginal loss surpluses.”

Amendments to Deposition transcript of Kevin Gates, #2 ~ Federal Energy Regulatory Commission (09-07-2011)

Quote:
“I submit the following corrections to the deposition transcript in order to remedy errors in the transcript.”

Deposition transcript of Kevin Gates, #2 ~ Federal Energy Regulatory Commission (09-07-2011)

Quote:
“Q: You know that there are tax rules relating to wash transactions; correct?”

Deposition transcript of Alan Chen, #2 ~ Federal Energy Regulatory Commission (07-20-2011)

Quote:
“Q. And do you have any reason to believe that you bid less than $50 on any of these transactions for the congestion element?

MR. ESTES: If you know.

BY MR. TABACKMAN: Q. I can show you the — we’ve got PJM data that reflects that.

A. My recollection is most of the days are 50, but there are some days maybe there’s some trades I put maybe like 35 or maybe 45, but most of — I mean most likely it’s $50, yeah.”

The Independent Market Monitor for PJM ~ (01-06-2011)

Quote: “See Irfan Mohammed Amanat, Exchange Act Rel. No. 54708, 89 SEC Docket 714, 726–33 (2006) (finding that respondent ‘engaged in fraudulent scheme to obtain market data rebates from Nasdaq by deceptively executing thousands of wash trades and matched orders’).”

Deposition Transcript of Alan Chen, #1 ~ (10-07-2010)

Quote:
“Q: And why did the transmission loss credit cause you to become involved in paired trading when you didn’t prior to that?

A: It all go back to my overall trading strategy. I tend to put — for my personal account, I tend to put on low risk, low reward with high reward potential. So you’re not going to lose a lot of money, and that’s the minimum. I’m not taking a high-risk, high-reward trade. For this low-risk, low-reward trade, if you have the transmission loss credit, it cover part of the cost, at least. Sometimes it cover all, and sometimes it cover part. So make this type of trades more profitable. If you’re losing money, you could lose cents or tenths of cents. If you’re making money, you are also making cents or tenths of cents,but you also have a big potential of high reward. When one of the leg is rejected, the other leg could get you a windfall of money. So that’s kind of the potential, high-reward potential.”

Deposition transcript of Kevin Gates, #1 ~ Federal Energy Regulatory Commission (09-23-2010)

Quote:
“Q: How did it do that?

A: Made it more attractive.

Q: In what way?

A: Increased return and/or lowered risk.”

Deposition transcript of Lawrence Eiben ~ Federal Energy Regulatory Commission (09-23-2010)

Quote:
Q: Without revealing any communications you’ve had with your attorneys, can you discuss what [Kevin’s] thoughts were on the potential outcome?

A: Sure. Kevin mentioned that he was somewhat shocked that we were in this situation. He did not fully understand what, if anything, we had done wrong. His take was just that he was kind of shocked by the whole thing.”

Deposition transcript of Serge Picard ~ Federal Energy Regulatory Commission (09-10-2010)

Quote:
Pg 118 19-23 I wasn’t afraid of a tariff violation and I still am having a little difficulty of seeing it as a market manipulation, an energy manipulation, but that wasn’t my prime concern.

Pg 117 10-13 Q. Did you have a concern at the time that it may constitute a tariff violation or that it would violate some other rule or regulation?
A. No.”

Confidential Referral of Potential Violations of FERC Market Rule ~ (08-16-2010)

Quote: “Dear Mr. Bay:

PJM Interconnection, L.L.C. (“PJM”) submits this written referral to the Commission because PJM has reason to believe that the market participants referenced below violated the Commission’s market rule set forth in 18 C.F.R. § 1c.2 that prohibits market manipulation in electric energy markets.”

Energy Market Transparency and Regulation ~ Hearing before the Subcommittee on Energy of the Committee on Energy and Natural Resources of the United States Senate (03-25-2009)

Quote: “…if the trader is taken advantage of a market rule or a market loophole then we don’t have authority to go after them. But if they’re intentionally trying to manipulate the market then that’s where we can go after them.” – Anna Cochrane, Acting Director of the Office of Enforcement, Federal Energy Regulatory Commission”
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