U.S. regulators, Deutsche Bank in settlement talks in manipulation case

The U.S. Federal Energy Regulatory Commission is in settlement talks with Deutsche Bank AG, which disputed $1.6 million in proposed penalties after the agency said a bank unit manipulated energy markets.

FERC’s staff requested until Jan. 18 to reply to the bank, “due to ongoing settlement discussions” between the agency and Frankfurt-based Deutsche Bank, the regulator said in a filing Friday.

FERC has increased its policing of energy-market manipulation after Congress in 2005 enhanced the agency’s enforcement authority. Since January 2011, it has made public 13 probes, and in March it reached a record $245 million settlement with Constellation Energy Group over one of those cases.

While the agency has investigated alleged incidents by traders at Deutsche Bank, JPMorgan Chase & Co. and Barclays Plc, FERC Chairman Jon Wellinghoff has said regulators aren’t singling out Wall Street banks.

Lawyers for Deutsche Bank’s trading unit on Nov. 5 disputed FERC’s claim that its employees manipulated California energy markets from January to March 2010. The bank’s response set up a potential showdown with the regulator over its enforcement powers.

“The legal position enforcement has taken here is radical,” Deutsche Bank Energy Trading LLC said in its filing at the time. “If the commission does not abandon these deeply flawed allegations now, they will be overturned by a federal district court.”

FERC spokeswoman Mary O’Driscoll declined to comment on the agency’s filing. “The document speaks for itself,” she said yesterday in an e-mail. FERC officials usually don’t comment on investigations.

Deutsche Bank spokeswoman Renee Calabro, reached by telephone Saturday, declined to comment.

FERC staff on Dec. 14 also sought an extension to respond to Deutsche Bank’s trading unit, due to illnesses within the agency and federal holidays.