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JPMorgan to pay $410M in manipulation case


NEW YORK (Reuters) - JPMorgan Chase & Co agreed on Tuesday to pay $410 million to settle allegations of power market manipulation in California and the Midwest, the latest in a series of high-profile inquiries by U.S. federal energy regulators.

The settlement, announced by the Federal Energy Regulatory Commission (FERC), will allow Chief Executive Jamie Dimon to close the books on one of several costly run-ins with regulators over the past year. It came days after the bank said it was quitting the physical commodities business.

JPMorgan Ventures Energy Corp., the commodity trading unit that became one of the biggest U.S. electricity traders with the 2008 acquisition of Bear Stearns, agreed to pay a civil penalty of $285 million and disgorge $125 million for “manipulative bidding strategies” from September 2010 through November 2012.

It is the second largest penalty in FERC history, and comes as the once-quiet government regulator steps up its pursuit of market malfeasance after gaining expanded powers from Congress in 2005, part of efforts to crack down on market manipulation after Enron Corp’s spectacular collapse.

JPMorgan spokesman Brian Marchiony said the settlement would “not have a material impact on our earnings” because the bank had previously set aside reserves.

FERC said JPMorgan admitted the facts in the agreement, but “did not admit or deny the violations.”

Dimon has moved this year to resolve multiple government investigations and correct problems regulators have found at the bank in an effort to take a more conciliatory stance as new rules are imposed more than five years after the start of the financial crisis.

The deal also came amid unprecedented political scrutiny of Wall Street’s involvement in the raw materials supply chain. Lawmakers have questioned whether banks should own metals warehouses and power plants, while the U.S. Federal Reserve reviews a landmark 2003 decision that first let them trade commodities.


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