• 3 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 5 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 9 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 12 minutes China's Blueprint For Global Power
  • 11 hours EU has already lost the Trump vs. EU Trade War
  • 2 hours Who writes this stuff? "Crude Prices Swing Between Gains, Losses"
  • 1 min Pioneer's Sheffield in Doghouse. Oil upset his bragging about Shale hurt prices. Now on campaigne to lower expectations.
  • 7 hours Climate Change Consensus Shifts in Wind, But Gas Is Still the Right Move
  • 9 hours World oil demand will keep growing until 2030, climate-damaging emissions longer, says IEA
  • 1 min Atty General Barr likely subpeona so called whistleblower and "leaker" Eric Ciaramella
  • 14 hours Shale Gas News – November 9, 2019
  • 17 hours ''Err ... but Trump ...?'' #thedonkeystays
  • 4 hours Iran's Master Plan?
  • 10 hours Does .001 of Atmosphere Control Earth's Climate?!
  • 2 hours Iran Finds New Oil Field With Over 50 Billion Barrels: Rouhani
  • 19 hours The lies and follies of the "cry wolf" enviros: No more fire in the kitchen: Cities are banning natural gas in homes to save the planet
  • 18 hours CHK Trading @ 90 Cents
  • 10 hours Joe Biden, his son Hunter Biden, Ukraine Oil & Gas exploration company Burisma, and 2020 U.S. election shenanigans
Alt Text

The Worst Oil Trades Ever Made

Wall Street is full of…

Alt Text

What The Market Is Overlooking In The Occidental Deal

Occidental Petroleum has caught a…

Jen Alic

Jen Alic

 

More Info

Premium Content

JPMorgan Sanctioned for Energy Trade Manipulation

It’s not so easy any more to manipulate energy trades. Ask JPMorgan Chase & Co. (JPM: NYSE), which last week became the first ever actively trading company to be sanctioned by the Federal Energy Regulatory Commission (FERC).

The Commission has revoked JPMorgan Ventures Energy Corp’s right to trade power for six months in 2013.

JPMorgan isn’t the only one to be targeted for energy trades manipulating this month: The Commission has also proposed fines for some of the world’s other largest banks, including Barclays Plc (BARC:LSS) and Deutsche Bank AG (DBK:ETR).

Since 2005, and as a direct result of the collapse of Enron Corp. in 2001, FERC has won more personnel and power and is increasingly demonstrating that it means business. They’re going after anyone involved in manipulative or fraudulent activities in the energy market.

What are the fines if you’re caught, for instance, tampering with electric-grid reliability? Up to $1 million a day.

But the collapse of Enron in 2001 was the decisive factor. Enron traders’ energy market manipulation led to rolling blackouts in California in 2000-2001. Enron traders essentially engaged in illegal practices intended to drive up prices that then led to blackouts. FERC says it’s not going to happen again.

The sanctions against JPMorgan derive from the company’s blatant lack of cooperation in a California energy trading manipulation investigation. The company is accused of deliberately producing incorrect documents related to the investigation. JPMorgan insists it was an inadvertent mistake, according to Bloomberg.

In Huntington Beach, California, JPMorgan is using its controlling stake in electric generators to block changes to plants that must be implemented by the state in 2013.

FERC believes the bank was exploiting an unintended flaw in market rules to receive excessive payouts.

Barclays earlier this year had to pay out $453 million in a settlement with US and British regulators for manipulating the London interbank offered rate (Libor). Then in October, FERC proposed a $435 million fine on allegations that the bank manipulated energy prices in California and elsewhere in the west.

Deutsche Bank Energy Trading LLC is about to be slapped with $1.6 million for alleged energy trading misconduct in 2010. 

Now, energy traders are taking things a step further, according to FERC, and playing one market off the other. This is apparently what Barclays is under scrutiny for. To wit, traders are purposely taking losses in physical energy markets in order to make money on financial exchanges.

What do the sanctions mean, exactly, for JPMorgan? Well, as we’ve already mentioned, they are barred from trading for six months next year. This means that JP Morgan Ventures Energy Corp will not have the ability to receive competitive market prices for selling its physical power beginning in April 2013.

Texas was worried because JPMorgan enjoys a major presence in the state’s $34 billion wholesale power market, which is controlled by Electric Reliability Council of Texas (ERCOT_. However, because the sanctions are not targeting ERCOT, JPMorgan’s trading in Texas will not be affected. 

What does it mean for the market? Look to see a further tightening of energy trading regulations, more fines and a new trend for revoking rights.

By. Jen Alic of Oilprice.com




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play