Newspaper article Evansville Courier & Press (2007-Current)

JPMorgan Paying Millions as Penalty

Newspaper article Evansville Courier & Press (2007-Current)

JPMorgan Paying Millions as Penalty

Article excerpt

WASHINGTON - JPMorgan Chase & Co. agreed on Tuesday to pay $410 million to settle accusations by U.S. energy regulators that it manipulated electricity prices. The Federal Energy Regulatory Commission said the bank used improper bidding strategies to squeeze excessive payments from the agencies that run the power grids in California and the Midwest. The improper conduct occurred between September 2010 and November 2012, FERC said.

JPMorgan, the biggest U.S. bank, is paying a civil penalty of $285 million and returning $125 million in allegedly improper profits.

FERC said its investigation had found improper trading practices were used at Houston-based JPMorgan Ventures Energy Corp.

New York-based JP Morgan said in a written statement that it's "pleased to have reached an agreement with FERC to put this matter behind it." JPMorgan didn't admit or deny any violations.

The move is part of a broad crackdown by FERC on alleged price manipulation. FERC recently levied a $453 million penalty on Barclays, Britain's second-largest bank, for manipulating electricity prices in California and other Western states. Barclays is disputing the allegations.

FERC claimed JP Morgan's energy unit used five "manipulative bidding strategies" in California between September 2010 and June 2011, and three in the Midwest from October 2010 to May 2011.

The agency that runs the Midwestern power grid, now called the Midcontinent Independent System Operator, covers Manitoba and all or part of 15 states: Michigan, Minnesota, Wisconsin, Iowa, Missouri, Illinois, Indiana, Kentucky, North Dakota, South Dakota, Montana, Texas, Louisiana, Arkansas and Mississippi.

JPMorgan Ventures Energy has contracts with power generating companies to trade their electricity. FERC said the JPMorgan traders offered to sell electricity at artificially low prices in a "day-ahead" market, so that companies would put their plants on standby mode to quickly generate energy. …

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