JPMorgan case shows why energy trading schemes are chronic problem

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We all know what corporate law firms are for, right? To represent their clients' interest fairly and professionally, of course. To obfuscate, obstruct, delay, misdirect — sometimes that too.

So the saga of JPMorgan Ventures Energy Corp. and a slick little two-step it engaged in with its two law firms to fend off the Federal Energy Regulatory Commission bears exceptional interest, not least because its outcome may hint at a new approach to enforcement by that long-overmatched agency.

To put things in a nutshell, JPMorgan's electricity trading operation was accused of bid-rigging by the California Independent System Operator, which manages much of the state's wholesale power market through regular auctions. We explained in an earlier column how the alleged scheme in 2010 and 2011 may have cost California ratepayers as much as $200 million.

FERC duly launched an investigation of JPMorgan's trading, which will take months at least and could cost the firm a maximum of $1 million for every day it's found to have violated trading rules. Given that revenue of $14 billion a year flows into the JPMorgan division that houses the energy trading unit, that fine wouldn't count for much more than a rounding error.

http://www.latimes.com/business/la-fi-hiltzik-20120930,0,2080850.column

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