This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

JPMorgan Escapes Energy Probe With Cheap Slap on Wrist (Update 1)

Stocks in this article: JPM

Updated from 8:55 a.m. ET with morning market action and a statement from JPMorgan Chase.

NEW YORK ( TheStreet) -- JPMorgan Chase (JPM - Get Report) agreed to settle energy market manipulation charges.

The Federal Energy Regulatory Commission (FERC) on Tuesday announced the bank's energy trading subsidiary, JP Morgan Ventures Energy Corp. (JPMVEC), had agreed to "pay $410 million in penalties and disgorgement to ratepayers for allegations of market manipulation stemming from the company's bidding activities in electricity markets in California and the Midwest from September 2010 through November 2012."

JPMorgan's shares were down slightly in morning trading to $55.56, giving up earlier gains that may have reflected investors' relief that the company was able to move beyond one of the many regulatory investigations it is undergoing, without admitting fault, at a relatively cheap price.

JPMorgan's energy subsidiary will pay a $285 million civil penalty to the U.S. Treasury and return "$125 million in unjust profits" -- in the words of the FERC -- with $124 million going to ratepayers in the California Independent System Operator and $1 million to the ratepayers in the Midcontinent Independent System Operator.

FERC on Monday had released a letter listing preliminary findings that JPMVEC had "engaged in five manipulative bidding strategies designed to improperly obtain payments at above-market rates from the California Independent System Operator" between September 2010 and June 2011. The agency also said in the letter that JPMVEC had engaged in three "manipulative strategies" to obtain "excessive payments" from the Midwest Independent System Operator.

JPMorgan Chase said last Friday it was exploring " strategic alternatives " for its physical commodities business, including energy trading.

According to FERC's statement announcing the settlement, JP Morgan Ventures Energy Corp. "admits the facts set forth in the agreement, but neither admits nor denies the violations."

FERC said its "investigators determined 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."

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs