July 30 (Bloomberg) -- JPMorgan Chase & Co. energy traders who avoided individual penalties in a $410 million settlement with a federal regulator may face action by other agencies.
Federal and state agencies are free to pursue penalties against the bank’s employees if they choose, Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission, said today in an interview. He said the FERC would cooperate with other agencies, which he didn’t identify.
“We have had some discussions with some agencies that I can’t disclose at this time,” Wellinghoff said.
JPMorgan, the largest U.S. bank by market value, agreed today to pay $410 million to resolve FERC accusations that its traders manipulated power markets in California and the Midwest from 2010 to 2012. The agency decided not to pursue sanctions against individuals, though it named them in the settlement.
“The decision was made to move forward in this case from a standpoint of expeditiously settling the matter” not to punish individuals, Wellinghoff said. The FERC has previously reached agreements to end an investigation without sanctioning individuals, he said.
Asked in a separate interview with Bloomberg Television today if he was aware of any investigations being conducted by other agencies, the FERC chairman said he knew of none.
JPMorgan traders Francis Dunleavy, Andrew Kittell and John Bartholomew are still employed with the bank, according to the FERC settlement documents. They worked in JPMorgan’s commodities unit, run by Blythe Masters, the FERC order showed.
Dunleavy, Kittell and Bartholomew didn’t settle with the commission. The agency decided not to sanction them after they explained to the commission that their conduct was lawful, according to a statement from Gibson, Dunn & Crutcher LLP, the law firm representing them.
“The commission’s decision to voluntarily settle with JPMorgan and not proceed against the individuals can only be read as the commission correctly concluding that no case or findings against the individuals could be sustained in a court of law,” William Scherman, their lawyer, said in the statement.
He declined to comment on Wellinghoff’s interview.
Steven Greenlee, a spokesman for the California Independent System Operator, declined to comment whether the state grid authority was conducting its own investigation or has received any inquiries from government agencies.
FERC on July 16 announced $18 million in civil penalties for four former traders for Barclays Plc, over allegations of market manipulation. The sanctions were part of $488 million in fines and penalties levied at Barclays and the individuals, which the bank has vowed to fight.
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