JP Morgan Chase close to settlement over manipulating US energy markets charges

JP Morgan Chase & Co is close to agreeing to pay around $410 million to settle the US Federal Energy Regulatory Commission (FERC) allegations on manipulating energy markets in California and the Midwest.

The move would come a few days after the FERC slapped a fine totaling $453 million on London-based Barclays Bank and four of its traders for manipulating electric energy prices in California and other western markets between November 2006 and December 2008. (See: Barclays fined $453 mn for fudging US electricity markets)

Barclays denied any wrongdoing and is expected to move the federal district court to squash the FERC order.

Apart from agreeing to pay a $410 million fine, JP Morgan Chase would also would relinquish $200 million in unpaid claims from electricity buyers in California, The Wall Street Journal Yesterday reported, citing people familiar with the conversations.

The deal could be announced as early as this week, but the settlement is not expected to result in sanctions for three JP Morgan energy traders or its commodities chief Blythe Masters, the report added.

The settlement will come as a boon to the New York-based bank, which was expected to be fined close to $1billion by the FERC.

FERC had imposed a six-month ban on JPMorgan from trading electricity at market rates in November last year, for allegedly lying to investigators about its California trades.

The regulator had also accused Masters of giving misleading information to investigators.