JPMorgan Chase Faces Federal Probe Over Energy Trading 'Schemes'
May 3rd 2013 11:35AM
Updated May 3rd 2013 1:43PM
The New York Times reports on the contents of a confidential government memo sent to the bank in March, "warning of a potential crackdown by the regulator of the nation's energy markets":
Connoisseurs of corporate scandal -- and probably every investor who remembers the start of this century -- will immediately think of Enron, the energy market-manipulating giant that went from six-time consecutive winner of Fortune's "most innovative" award (1996-2001) to what was at the time the largest bankruptcy in U.S. history.
Government investigators have found that JPMorgan Chase devised "manipulative schemes" that transformed "money-losing power plants into powerful profit centers," and that one of its most senior executives gave "false and misleading statements" under oath.
The "schemes" in question reportedly originated in Houston, where JPMorgan traders under pressure to make big returns are alleged to have swindled California and Michigan out of $83 million by presenting deceptive energy prices. The bank says everything was on the up-and-up.
There's more alleged wrongdoing at the bank, including improper collection of credit card debt and silence over suspicious trading by Bernie Madoff, the biggest Ponzi schemer in history. The Times also says JPMorgan CEO Jamie Dimon, who is not personally under government scrutiny, met with prosecutors and the FBI this week to discuss the infamous "London Whale" case, a massive trading loss that prompted accusations of a cover-up and led to a blistering Senate report.
For more on this story, as well as other developments moving the market today, check out the DailyFinance Market Minute video below.