JPMorgan Chase & Co (NYSE:JPM) is facing a criminal investigation due to allegations that some of its employees tried to prevent a regulators probe regarding the bank’s power market deals in California and the Midwest.
JPMorgan Chase & Co (NYSE:JPM) is under scrutiny on allegations that some of its employees tried to obstruct a probe related to transactions of the bank in the power markets in California and the Midwest, according to a report from Reuters based on information from different sources with knowledge about the situation.
JPMorgan employees under investigation
According to the report, the Federal Bureau of Investigation (FBI) and prosecutors under the office of U.S. Attorney Preet Bharara in Manhattan are conducting the criminal investigation, which is in its early stages. Investigators are trying to find out if the involved employees of JPMorgan Chase & Co (NYSE:JPM) submitted to regulators all the required documents in their investigation regarding the transactions of the bank in California and the Midwest power markets.
A person who deliberately withholds information or lies to investigators during an investigation is committing an obstruction of justice, which is a criminal offense.
The Federal Energy Regulatory Commission (FERC) accused the subsidiary of JPMorgan Chase & Co (NYSE:JPM) of engaging in twelve separate manipulative bidding strategies from September 2010 to November 2012.
JPMorgan Ventures energy penalties
Last July 30, JPMorgan Ventures Energy Corp agreed to pay a penalty of $410 million to settle the manipulation charges filed against by the FERC. According to the agency , JPMorgan acknowledged the facts in the agreement, but “did not admit or deny the violations” as part of the settlement.
JPMorgan Chase & Co (NYSE:JPM) made a public statement that it did not lie to regulators during their investigation, and none of its employees have been charged of any wrongdoing.
Last month, The Wall Street Journal first reported that authorities launched a criminal investigation about the manipulative dealings of the bank in the power market.
Government officials motivated to investigate further
A letter from Massachusetts Senator Elizabeth Warren and Congressman Edward Markey to the FERC motivated authorities to investigate further the transactions of JPMorgan in the power markets, according to sources.
In their letter, the lawmakers questioned why FERC allowed the bank to settle the manipulation charges without admitting any wrongdoing, and no individual faced regulatory action. They also questioned FERC’s inaction against people who “impeded the Commission’s investigations.”
In November last year, FERC prohibited JPMorgan Chase & Co (NYSE:JPM) from selling power at market-based rates for six months. According to the agency, the sanction was imposed because the misrepresented and omitted significant information during the course of several months of communications with the California Independent System Operator (California ISO) and in filings to the Commission regarding requests for information related to its bidding activities in the energy market in the state.