Hedge Fund Managers Want To Add Potentially Exculpatory Conversation To Their Defense

Which makes sense.

Kevin and Rich Gates, the twins behind energy hedge fund Powhatan Energy, have been pretty pissed at the Federal Energy Regulatory Commission before. Pissed about what they see as FERC’s attempt to railroad them over some very profitable but possibly illegal energy futures, certainly pissed about the nearly $30 million fine that resulted. Pissed enough to sit menacingly behind their tormentor, former FERC enforcement chief Norman Bay, during his FERC commissioner confirmation hearing. But that’s nothing compared to how pissed they are now, what with FERC allegedly withholding evidence that some guy thought that was Powhatan was doing was A-OK.

In their filing, they say that they’ve learned that the Office of Enforcement has a tape in which PJM’s Independent Market Monitor Joe Bowring is talking to another trader discussing trades like those at the heart of the Powhatan investigation.

According to the filing, on the tape, “Dr. Bowring says that the trades did not violate the rules, that he understands why the traders engaged in them and that the rules need to be changed to remove the incentives that drove the trading. He also says that he would not refer the trading conduct to Enforcement if the traders stopped the trading in question.

Gates, Powhatan Says FERC Enforcers Didn’t Share Crucial Info [RTO Insider]
Hedge Fund Blasts FERC Manipulation Accusations [Law360]