Forum Post: JPMorgan Chase Accused of Manipulating Electricity Prices, Pays Record-Breaking Penalties
Posted 2 years ago on July 31, 2013, 9:33 a.m. EST by GirlFriday
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Specifically, the Federal Energy Regulatory Commission (FERC) accused Chase traders in Houston of devising elaborate schemes that essentially forced electricity grid operators—organizations that manage the flow of electricity—in California and the Midwest to pay for plants to sit idle, causing them to pay more than 80 times the cost of prevailing electricity prices for ten months between 2010 and 2011. Chase's alleged price-gouging echoes the infamous 2001 Enron scheme, in which the company constricted electricity supply in California in order to jack up prices. Even though the penalty for Chase's bad behavior is the largest the FERC has ever slapped on a company, the fine still falls in line with trifling punishments leveled against the bank—and other financial behemoths—for similar egregious behavior. Chase’s $410 million settlement, which was reached on Tuesday and will be divided between ratepayers and the Treasury Department, represents less than two percent of Chase’s record $21.3 billion 2012 profits—or about what it earns in a single week. (FERC has also barred the bank from trading in US energy securities for the next six months.) http://www.motherjones.com/mojo/2013/07/jpmorgan-chase-manipulate-electricity-price-settlement-ferc
The fines don't work. If they did, then they wouldn't have done this. Barring Chase from trading in US energy securities for six months? How about five years?