JPMorgan faces FBI criminal probe in California energy market case
NEW YORK -- JPMorgan Chase & Co. may have settled with federal energy regulators, but the FBI has opened its own investigation into the bank’s role in California’s electricity market.
The FBI has launched a criminal probe into allegations at the heart of a case settled between JPMorgan and the Federal Energy Regulatory Commission last month, according to a person briefed on the matter who was not authorized to speak publicly. It was not clear when the criminal probe began and how, or if, it may have progressed.
The FBI investigation intensifies the government’s scrutiny of JPMorgan, the nation’s biggest bank and long considered among the country’s best managed and strongest financial institutions.
Federal prosecutors in Manhattan last week accused two former mid-level JPMorgan traders with cooking the books in last year’s “London Whale” trading fiasco. The traders allegedly tried to hide losses related to risky derivatives bets that backfired, costing the bank more than $6 billion.
In late July, JPMorgan agreed to pay $410 million in a settlement with FERC. The regulator’s allegations stemmed primarily from the bank’s alleged manipulation of California’s electricity market from 2010 to 2012. The bank was also accused of rigging power markets in the Midwest.
JPMorgan’s FERC settlement contained neither an admission nor denial of wrongdoing.
A spokesman for the bank has declined to comment on reports of a U.S. Justice Department probe in the California energy case.
The Wall Street Journal reported earlier this week the Justice Department’s investigation was being handled by the office of Preet Bharara, the U.S. attorney in Manhattan.
The Journal reported the Justice Department decided to look into JPMorgan’s energy-trading as the FERC case was concluding.
Justice Department officials declined to comment.
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