Senators question FERC over JPMorgan settlement
(MoneyWatch) Two U.S. senators are questioning the underpinnings of JPMorgan Chase & Co.'s (JPM) $410 million settlement with the Federal Energy Regulatory Commission in a case alleging that the giant bank rigged energy markets.
Sens. Elizabeth Warren and Edward J. Markey, both Massachusetts Democrats, also want to know why JPMorgan executives, said to have impeded the government's investigation, aren't being punished.
"While this fine is large in absolute terms, the total penalties are equal to roughly 1.3 percent of JPMorgan's 2012 profits," the two senators said in a letter to FERC Chairman Jon Willinghoff. "We are concerned about whether the settlement includes adequate refunds to defrauded ratepayers and also concerned that the individual executives who sought to impede the commission's investigation will not be punished. It is critical that government settlements provide appropriate relief for consumers and deter future law-breaking."
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According to FERC's allegations, a JPMorgan energy-trading unit engaged in 12 deceptive bidding strategies in wholesale energy markets from September 2010 to November 2012 in California and the Midwest, resulting in tens of millions of dollars in overpayments by grid operators. Of the $410 million JPMorgan will pay, $125 million consists of disgorged profits that will go to ratepayers in California and the Midwest and $285 million is for civil penalties.
One of the JPMorgan officials in charge of the energy trading unit who was allegedly aware of the market manipulation was Blythe Masters. One of the top women executives on Wall Street and someone credited with creating some of the exotic derivatives that helped bring the financial system to the brink of ruin, Masters was among those who escaped any personal liability or culpability for the price rigging.
"Why did the the commission decide to take no action against JPMorgan executives who planned and executed market manipulations or who impeded the Commission's investigations?" the lawmakers wrote. "Is the commission concerned that these executives will continue to engage in illicit activities at other institutions?"