JPMorgan to pay $410 million penalty for power price manipulation

Posted By Kristen Butler,  |  Updated July 30, 2013 at 3:41 PM
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JPMorgan Chase & Co. will pay $410 million in penalties after allegedly manipulating power markets in the Midwest and California, according to the U.S. Federal Energy Regulatory Commission (FERC).

FERC announced the accusations Monday, saying JPMorgan Ventures Energy Corp. engaged in eight improper bidding strategies that manipulated the price of electricity between September 2010 and November 2012, pulling excessive payments from power grid operators.

It was revealed today that the New York-based bank would pay penalties of $285 million to the federal government and $125 million to ratepayers, though it disputes the charges.

Just days after a congressional hearing examined market manipulation by big banks with ownership of raw materials, JPMorgan announced on July 26 that it may sell or spin off its physical commodities business -- including energy trading.

Since 2011, the FERC has revealed more than a dozen investigations of energy market manipulation.

FERC recently fined Barclays and four of the London-based bank's former traders a total of $453 million for manipulating electricity prices in California and other parts of the West. They were also ordered to give up $34.9 million in profits. Barclays disputes the charges and is fighting the penalty.

In January, Deutsche Bank agreed to pay $1.6 million after FERC claimed an energy-trading unit manipulated markets in 2010. The Frankfurt-based bank didn't admit or deny wrongdoing.

In March 2012, Constellation Energy Group Inc. paid a $245 million settlement after FERC alleged trading violations in New York. Constellation didn’t admit or deny any wrongdoing.

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