On Friday, FERC filed an opposition to Maxim’s motion to dismiss. FERC contends none of Maxim’s motion meets the requirements for dismissing a complaint.
FERC asserts the Commission’s market behavior rule 18 C.F.R. § 35.41(b) created a duty to speak:
Maxim focuses most of its Memorandum on the second category of wrongdoing under the Anti-Manipulation Rule, concerning misrepresentations and material omissions, 18 C.F.R. § 1c.2(a)(2). As the Commission explained in Order No. 670, this prong of the Rule makes it unlawful to “mak[e] a material misrepresentation or a material omission as to which there is a duty to speak under a Commission-filed tariff, Commission order, rule, or regulation, . . .” Order No. 670 at P 49. Here, Maxim had a “duty to speak” because it was required by a separate rule, 18 C.F.R. § 35.41(b), not to omit material information in communications with Market Monitors. Pet. ¶ 73; Order at P 43 n.91, P 52 n. 111; see pp. 16-17 infra.
If FERC enforcement is right (Commissioner Clark dissented), then a market participant would have a “duty to speak” across the board, i.e., with the RTOs and ISOs, and their market monitors.
This could very well set up an affirmative duty to report loopholes if an entity is submitting offers and bids in the market (which are considered communications). Texas currently has such a rule for its market.
Also at issue here is whether an individual person can be held liable under FERC’s anti-manipulation rule. Mitton argues that “entity does not and cannot mean an individual.” Citing the Barclays court order on this, FERC reiterates the same arguments it won on before.