JPMorgan Chase to pay $410 mn to settle electricity market rigging allegations
31 July 2013
JPMorgan Chase & Co will pay $410 million to settle allegations of rigging the power market in California and the Midwest, the latest bank to be hauled up by the US energy regulator for manipulating the electricity markets.
JP Morgan, the largest bank in the US by assets, agreed to pay a $285 million penalty to the Federal Energy Regulatory Commission (FERC) and give back $125 million in unjust profits raked in over a two-year period from 2010-2012 while trading electricity in California and the Midwest.
The first $124 million of the disgorged profits will go to ratepayers in the California electricity market, while the remaining $1 million to ratepayers in the Midwest.
The penalty comes after the FERC in January fined Deutsche Bank $1.6 million and this month slapped a $453 million fine on Barclays Bank for manipulating electric energy prices.
The FERC said that the case stems after it received multiple complaints from market monitors in California and Midwest in 2011 and 2012 regarding the bidding practices of JPMorgan's unit JP Morgan Ventures Energy Corporation (JPMVEC).
FERC investigators found that JPMVEC engaged in 12 manipulative bidding strategies designed to make profits from power plants that were usually out of the money in the marketplace. In each of them, the company made bids designed to create artificial conditions that forced the ISOs to pay JPMVEC outside the market at premium rates.
JPMVEC neither admitted nor denied the violations.