JPMorgan Chase & Co. (NYSE: JPM) will pay $410 million in civil penalties and disgorged profits to settle federal allegations of manipulation in electricity markets, regulators said Tuesday.
About 70 percent of the settlement is headed for federal coffers, and the rest to ratepayers in California and the Midwest, where regulators said the New York financial giant?s commodities trading arm allegedly misrepresented prices of electricity contracts.
The Federal Energy Regulatory Commission?s allegations originally came to light in May when the New York Times reported on a leaked government document, which detailed allegations of manipulation in bidding and offering activities between September 2010 and November 2012.
In a consent agreement with Houston-based JP Morgan Ventures Energy Corp., FERC said it had investigated bids developed by bank employee Francis Dunleavy, who supervised two others, Andrew Kittell and John Bartholomew, in Houston.
FERC didn?t charge the three Houston-based employees, who were confident ?that if the commission were to make any finding that they had engaged in any misconduct, they were fully prepared to defend and prove the legality of their conduct in court,? said William Scherman, an attorney at New York-based Gibson, Dunn & Crutcher LLP, in a statement.
?We are pleased to put the matter behind us, and due to reserves previously set aside, the settlement will not have a material impact on earnings,? said Greg Hassell, a Houston-based spokesman for the bank.
Indeed, analysts had previously said if the bank was hit with even a large fine, it would be pocket change for the $2.4 trillion financial services player.
Collin Eaton covers banking, finance and securities for the Houston Business Journal. For his breaking stories and industry insights, follow him on Twitter.