US FREC probe into power market manipulation by JPMorgan hots up

JPMorgan Chase & Company (NYSE:JPM), the largest bank in the US, is being sued by the Federal Energy Regulatory Commission (FERC) for the release of 25 e-mails as part of its ongoing investigation into whether the bank manipulated power markets in California and the Midwest region.

The FERC investigation started in August last year, after the regulator received complaints from the Californian and Midwest grid operators that the bidding practices of J.P. Morgan Ventures Energy Corporation, a trading subsidiary of the bank, were “abusive”, and generated at least $73m in improper payments, reports Bloomberg.

FERC accused the bank of inappropriate use of attorney-client privilege to withhold or redact 53 e-mails that were subpoenaed back in April. The bank subsequently released 28 of the e-mails.

The regulator is investigating efforts by Houston-based J.P. Morgan Ventures Energy to extract excessive payments or above-market prices from both California ISO and Midwest Independent Transmission System Operator Incorporated, according to Bloomberg.

In March of this year, Jon Wellinghoff, FERC’s chairman, said that the agency would be “vigorous” in seeking to stop companies from manipulating electricity markets.

His comment followed a record $245m settlement with Constellation Energy Group Incorporated over its trading practices in New York and New England.

To add to JPMorgan’s woes, it may also find itself caught up in the international investigation currently underway into an attempt by banks in the UK and US to fix the London interbank offered rate or Libor rate.

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