One of the 16 banks sure to be implicated in the Libor rate-rigging scandal is JPMorgan Chase. Their submissions to Libor consistently fell on the low end of the scale, presumably fitting for what was thought to be a first tier bank, but we don’t know yet what those responsible at the bank for submitting the Libor did in response to requests from traders. But we do know with a fair degree of certainty that JPM won’t be particularly forthcoming about it. They’re already reeling from the exposure of the Fail Whale trades, which could cost the bank as much as $9 billion. And there are other recent exposures as well.
A U.S. judge has ordered JPMorgan Chase & Co to explain why the court should not force the bank to turn over 25 internal emails demanded as part of an investigation into whether it manipulated electricity markets in California and the Midwest.
The Federal Energy Regulatory Commission (FERC) filed a petition in federal court in Washington on Monday asking the court to order the bank to show cause as to why it would not comply with a subpoena issued by the commission as part of its investigation into the bank’s power trading.
On Thursday, U.S. District Judge Colleen Kollar-Kotelly gave the bank until July 13 to submit an explanation as to why the court should not enforce FERC’s subpoenas. JPMorgan has asserted the emails are protected by the attorney-client privilege.
Coincidentally, JPMorgan is set to release earnings figures on July 13, the same day as this deadline.
JPM and other banks stand accused of manipulating energy markets, showing how so much of this falls in line with the Enron scandal of over a decade ago. FERC has already slapped a $245 million fine on Constellation Energy in the ongoing investigation.
Between the energy trading probe, Libor and the Fail Whale trades, it’s hard out there for a JPMorgan Chase banker. The stock has dropped from $46 a share to $34 in the space of four months, and the reputation of the bank as masters of regulating their own risk, particularly the reputation of Jamie Dimon as a golden boy, has taken a hit within the investment community, if not on Capitol Hill. And as all of these investigations are ongoing, the worst may still be to come for JPM.