By David Sheppard
NEW YORK May 29 A U.S. Congressman on Wednesday
called on the Department of Justice to investigate JPMorgan
Chase & Co's power trading in Michigan, as the Federal
Energy Regulatory Commission (FERC) considers whether to
sanction the firm.
Michigan Congressman Dan Kildee, a Democrat who sits on the
Committee on Financial Services, said in a letter to the DoJ
that it should pursue its own investigation into JPMorgan to see
if it manipulated electricity markets.
The bank has told shareholders it has been notified by FERC
staff that they intend to recommend that the five members of the
commission take action over an alleged manipulative trading
scheme in Michigan and California earlier this decade.
JPMorgan has denied that it manipulated power markets, and
has vowed to "vigorously defend" itself and its employees.
"These allegations are serious charges, including traders
devising deliberate schemes to manipulate energy prices and top
bank executives lying under oath," said Kildee in the letter, a
copy of which was obtained by Reuters.
"The people of Michigan, and the American public generally,
deserve a marketplace where all participants play by the same
rules. I urge the Justice Department to resolve this matter by
investigating these potentially illegal practices."
JPMorgan spokeswoman Jennifer Zuccarelli declined on
Wednesday to comment on Kildee's letter, but said that the FERC
notice to the bank is only a "statement of the staff's views,
and does not represent findings of the commission."
She added "we strongly disagree" with the FERC conclusions.
The Commission has not accused the bank of market
manipulation. Federal regulators often notify targets of
investigations to give them a chance to show why enforcement
actions should not be brought.
The regulator has, however, sanctioned the U.S. bank's
electricity trading unit for failing to disclose information
during the investigation. It imposed a six-month long
restriction on its power trading starting April 1.
Pressure has also mounted on the bank since a May 2 New York
Times report cited a confidential FERC document saying
investigators had found evidence JPMorgan Energy Ventures Corp.
devised "manipulative schemes" in Michigan and California
between 2010 and 2011.
The alleged scheme saw authorities in California and
Michigan make "excessive" payments of around $83 million to
JPMorgan, the New York Times report said citing the FERC
FERC Chairman Jon Wellinghoff, who has stepped up
enforcement of rules and investigations into Wall Street banks'
trading practices during his time at the regulator, on Tuesday
submitted his resignation to President Barack Obama.
He will remain at the agency and continue to vote on
commission matters until a replacement is nominated and
confirmed by the U.S. Senate, a process that could take several
months. His term was due to expire at the end of June, and his
departure had been anticipated.