The U.S. Senate Permanent Subcommittee on Investigations asked energy-market regulators to hand over “key documents” from a probe of JPMorgan Chase & Co. (JPM) as lawmakers examine banks’ roles in commodities markets.
Carl Levin, the Michigan Democrat who leads the panel, and John McCain of Arizona, its ranking Republican, sent a letter to the Federal Energy Regulatory Commission seeking records from the agency’s inquiry and settlement with JPMorgan, according to a copy of the Aug. 2 request obtained by Bloomberg News.
The lawmakers asked the FERC to include a 70-page document outlining investigators’ findings, which was cited in articles by the New York Times. The regulator kept that document private when announcing a $410 million accord with JPMorgan last month.
The committee has repeatedly investigated Wall Street firms in the wake of 2008’s credit crisis, chronicling Goldman Sachs Group Inc.’s sales of mortgage-linked instruments and JPMorgan’s handling of botched derivatives bets. In an interview last month, Levin said lawmakers would use subpoena power to examine banks’ dealings in physical commodities.
“We have been into this issue for a long time and it’s a very, very significant issue,” Levin said July 23 of his panel’s look at banks’ businesses tied to energy and natural resources. The potential for conflicts of interest or price manipulation “is huge,” he said.
Spokesmen for the FERC, the bank, the Senate panel and Levin’s and McCain’s offices declined to comment on the lawmakers’ request or didn’t respond to messages. The letter was reported earlier this month by Platts, a publisher of commodities market prices and news.
JPMorgan’s energy-trading unit engaged in 12 bidding strategies in wholesale energy markets from September 2010 to November 2012 that resulted in tens of millions of dollars in overpayments from grid operators, the FERC said while announcing its settlement in July.
The bank accepted the facts in the FERC settlement without admitting or denying wrongdoing, the agency said. The firm announced last month that it was looking to exit the physical commodities business, which includes energy trading.
Senator Sherrod Brown, an Ohio Democrat on the Senate Banking Committee, held a subcommittee hearing last month on financial firms’ involvement in commodities. He said he plans to hold his next hearing on the topic as soon as September.
Senators Elizabeth Warren and Edward Markey, both Massachusetts Democrats, sent a separate letter to the FERC in July, seeking more details on the regulator’s probe of JPMorgan. They asked why the agency didn’t target “executives who planned and executed market manipulations or who impeded the commission’s investigations.”
The Justice Department and Federal Bureau of Investigation are conducting their own examination of whether criminal laws were violated by individuals, a person briefed on the matter said last week. That inquiry, which focuses on conduct at issue in the FERC’s case, is in an early stage.