Energy trader JPMorgan Chase & Co. denies charges that it manipulated California's electricity market for extra profit. The Wall Street giant calls itself the victim of strong-arm tactics by state officials – and is demanding that they return millions taken from the firm while the electricity investigation is still pending.

In a legal filing with federal officials Friday, the investment bank said claims that it gamed California's power market are nothing more than "feeble arguments."

The California Independent System Operator, a quasi-state agency that oversees wholesale electricity trading, has accused JPMorgan's trading division in Houston of pocketing $73 million in improper profits by manipulating a subtle flaw in the market structure.

The case is noteworthy because it's the first major allegation of market manipulation since the energy crisis of 2000 and 2001, when companies like Enron Corp. extracted billions in extra profits from California through questionable trading tactics.

One consultant has compared JPMorgan's behavior to an Enron trick dubbed "Get Shorty," in which power suppliers tricked the ISO's computers out of fat fees for producing minimal volumes of electricity.

The ISO, however, said the latest case doesn't mark a return to the old days. Rather, its swift response shows how far it's come in being able to fix market chicanery.

Besides filing a quick claim with the Federal Energy Regulatory Commission, or FERC, the California agency said it was able to retrieve $20 million from JPMorgan by withholding funds as trades were being settled.

California officials said they took those dollars under new powers granted by the feds.

JPMorgan, though, said the ISO overreached. The feds didn't give the ISO the right to take the money while a case was still in progress, the company said.

In its filing with FERC, the company demanded that the ISO "immediately return all unlawfully withheld payments with interest."

The company said FERC hasn't "made any findings whatsoever, let alone concluded that (JPMorgan) has engaged in any inappropriate conduct."

Responding to JPMorgan's filing, the ISO said it thought it had the federal agency's permission to withhold money from the company right away – only to learn otherwise.

The ISO has since asked FERC for permission to keep the cash while the case is pending. If that's rejected, it said it will return the money.

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