Imagine you're accused of stealing from your employer. After a lengthy investigation by your employer, during which you were required to produce evidence and submit to exhaustive questioning, you were given two choices of how the case would proceed next.
Your first option is to elect an administrative hearing run by your employer, with the head of HR acting as an impartial judge. During this process, you would be allowed to ask your employer for documents, question them, cross examine their witnesses, and present your own evidence and witnesses. Afterwards, the head of HR would make a decision that would have to be further approved by the CEO of the company. If that decision didn't clear your name, you could appeal to the court system. But the judge in that matter would only be able to examine the CEO's decision to decide if it comported with the law. The judge would give the CEO a huge amount of deference for his expertise in deciding things of a business nature.
Your second option is to forego the corporate kangaroo court and ask the CEO to just make a decision, based on the company's evidence, to make you give back what it thinks you stole and to levy what he feels is an appropriate fine for punitive damages. You'd have the opportunity to present your own evidence to the CEO, but would not be allowed to ask the company for documents or question their witnesses. After the CEO makes his decision, the company would have to take action against you in court to enforce the decision of the CEO to collect its goods and penalties. In this course, you would ultimately be trying your case before an impartial judge and jury, instead of the head of HR or the CEO, and would be permitted all the same due process allowed in the foregone administrative hearing, such as discovery, depositions, cross examination, presentation of your own witnesses.
Which option would you choose?
You'd choose the second option, wouldn't you? But what if your employer told the judge you had no due process rights in court and that he must decide the case based only on the decision of the CEO and the evidence collected by your employer? There would be no jury. You'd be crazy to select that option, and furthermore it would turn the court process into a one-sided kangaroo court.
But that's how FERC has interpreted the two choices available to defendants accused of market manipulation under the Federal Power Act. FERC believes a defendant choosing the court option has chosen to forego his due process rights.
Your first option is to elect an administrative hearing run by your employer, with the head of HR acting as an impartial judge. During this process, you would be allowed to ask your employer for documents, question them, cross examine their witnesses, and present your own evidence and witnesses. Afterwards, the head of HR would make a decision that would have to be further approved by the CEO of the company. If that decision didn't clear your name, you could appeal to the court system. But the judge in that matter would only be able to examine the CEO's decision to decide if it comported with the law. The judge would give the CEO a huge amount of deference for his expertise in deciding things of a business nature.
Your second option is to forego the corporate kangaroo court and ask the CEO to just make a decision, based on the company's evidence, to make you give back what it thinks you stole and to levy what he feels is an appropriate fine for punitive damages. You'd have the opportunity to present your own evidence to the CEO, but would not be allowed to ask the company for documents or question their witnesses. After the CEO makes his decision, the company would have to take action against you in court to enforce the decision of the CEO to collect its goods and penalties. In this course, you would ultimately be trying your case before an impartial judge and jury, instead of the head of HR or the CEO, and would be permitted all the same due process allowed in the foregone administrative hearing, such as discovery, depositions, cross examination, presentation of your own witnesses.
Which option would you choose?
You'd choose the second option, wouldn't you? But what if your employer told the judge you had no due process rights in court and that he must decide the case based only on the decision of the CEO and the evidence collected by your employer? There would be no jury. You'd be crazy to select that option, and furthermore it would turn the court process into a one-sided kangaroo court.
But that's how FERC has interpreted the two choices available to defendants accused of market manipulation under the Federal Power Act. FERC believes a defendant choosing the court option has chosen to forego his due process rights.
However, a federal court judge has recently decided that the defendants of FERC's market manipulation probes are entitled to due process when electing to have FERC's penalties reviewed by a court.
In FERC v. Maxim Power Corp., et al.,
In FERC v. Maxim Power Corp., et al.,
... the U.S. District Court for the District of Massachusetts ("District Court") determined that review of a FERC-issued penalty for alleged market manipulation must be treated as an "ordinary civil action" requiring de novo review and finding against FERC's arguments to the contrary. The District Court further ordered in its decision, FERC v. Maxim Power Corp., et al., that in the corresponding civil action—to determine whether to affirm FERC's prior penalty assessment against the owners and operators of a power plant in Pittsfield, Massachusetts ("Maxim") and one of their employees (together, "Respondents")—the Respondents will be entitled to the full discovery of an ordinary civil case, and the proceeding can be decided by a jury, if necessary.
This doesn't mean that market manipulators can skip away without penalty, it simply means that court review of FERC's multi-million dollar penalties against alleged market manipulators will be subject to the ordinary due process allowed to everyone accused of a crime.
That's fair.
That's fair.
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