The FBI and Manhattan DA Preet Bharara’s office are conducting a criminal probe into whether JPMorgan employees tried to obstruct a regulatory investigation into power market manipulation, as reported in a Reuters exclusive last week. The results of the probe, and ramifications for energy trading will set the tone for this lucrative business in the future.
In July, JP Morgan Ventures Energy Corporation agreed to pay a USD$410m penalty to the US Federal Energy Regulatory Commission (FERC) for allegations of market manipulation from September 2010 to November 2012.
The settlement sparked a response from US Senators, questioning whether the agreement and lack of proceedings against individuals at the company provided ‘appropriate relief for consumers and deter future law-breaking.’
According to Reuters’ sources, the letter sparked the FBI and Manhattan DA’s criminal probe.
The results from this investigation will be interesting to follow. The focus is now on the individuals involved in the case, and from allegations of power market manipulation to the obstruction of justice. This charge is raised if there is an allegation that a person under investigation has lied to the investigating officers, in this case the FERC. The charge carries a 20 year prison term, as stipulated under s1519 of the US Code.
JP Morgan is the second big bank to be hit by a fine from FERC in connection with market manipulation allegations. Barclays received a USD$435m penalty for manipulating energy prices which the bank has vowed t0 challenge in court.
JP Morgan pays $410m in energy case (bbc.co.uk)
How JP Morgan Gamed the Electricity Market (theepochtimes.com)
Big Banks Targeted For Rigging Electricity Markets (thinkprogress.org)