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Newsjock

(11,733 posts)
Mon Jul 30, 2012, 10:17 AM Jul 2012

JPMorgan Chase under investigation for rigging electricity markets in 2010-11

Source: Sacramento Bee

... State officials believe a subsidiary of JPMorgan Chase & Co., the New York investment bank, pulled down an extra $73 million by exploiting a small wrinkle in California's electricity market over several months in 2010 and 2011.

Officials said they've recovered $20 million from the company so far.

... Robert McCullough of McCullough Research in Portland ... said JPMorgan's trading strategy appears to be similar to "Get Shorty," one of the infamous schemes cooked up by Enron to ramp up profits at California's expense during the energy crisis of 2000 and 2001.

... FERC's probe goes beyond California. According to court papers, the agency is also investigating whether JPMorgan manipulated markets at the Midwest Independent Transmission System Operator, a multistate agency that's comparable to the California ISO.

Read more: http://www.sacbee.com/2012/07/30/4672960/electricity-trading-probed.html

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JPMorgan Chase under investigation for rigging electricity markets in 2010-11 (Original Post) Newsjock Jul 2012 OP
Is there anything they haven't manipulated and/or rigged? tridim Jul 2012 #1
they've recovered $20 million - and what are they gonna do with that leftyohiolib Jul 2012 #2
It's just the cost of JP doing business. They know fines are coming in the future and plan for it. Lint Head Jul 2012 #3
The article doesn't give any details about what they did wrong badtoworse Jul 2012 #4
 

leftyohiolib

(5,917 posts)
2. they've recovered $20 million - and what are they gonna do with that
Mon Jul 30, 2012, 10:59 AM
Jul 2012

will it go to those that jp ripped off?

Lint Head

(15,064 posts)
3. It's just the cost of JP doing business. They know fines are coming in the future and plan for it.
Mon Jul 30, 2012, 11:37 AM
Jul 2012

It's built into their bottom line. JP Morgan Chase doesn't give a real rat's ass.

 

badtoworse

(5,957 posts)
4. The article doesn't give any details about what they did wrong
Mon Jul 30, 2012, 12:27 PM
Jul 2012

There is nothing wrong with bidding a higher price into the real time market than you did in the day ahead market. If you get an award at the day ahead price, you have to sell at the day ahead price if the ISO calls you and tells you to run. You only get the real time price on energy that did not get a day ahead award. If you get a day ahead award and they don't run you or only run you at minimum load, then they pay you the "make whole" for being available (which is only fair).

The way the process works is you make your day ahead bid first (the day before the energy will be needed) and know by late in the afternoon whether it was accepted. If the bid is accepted, you have a commitment from the ISO to buy your energy at the price you bid. If the bid is not accepted, you then have the opportunity to adjust your bid for the real time market. If you do nothing, your day ahead bid becomes your real time bid by default, but you can bid higher or lower in real time, if you want. It is common to make adjustments to the day ahead bid in this situation. If you get called in the real time market, you get the greater of the price you bid or the actual real time price, whichever is higher. This is the way it works in PJM.

It's not clear to me what JPM did wrong.

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