The federal government today suspended JPMorgan Chase & Co. from trading for profit in California's electricity market, after the investment bank submitted false information to investigators looking into Morgan's bidding practices.
Morgan's trading arm was suspended for six months starting next April 1, according to the order from the Federal Energy Regulatory Commission.
The company can trade power in California, but not at "market-based rates." In effect, it would have to sell power at cost.
FERC has been investigating Morgan for months over allegations that it earned $73 million in excess profits in California's wholesale electricity market through manipulative trading strategies. The federal agency threatened Morgan with suspension after finding that the firm had supplied false information to investigators.
Morgan said the false information was an accident. It apologized and said the actions didn't justify a suspension.
The firm has also denied any wrongdoing in connection with its trading activities.
Morgan sells electricity into the wholesale market via the California Independent System Operator, the quasi-governmental entity that runs the state's transmission grid. ISO officials triggered the initial investigation by complaining to FERC that Morgan had used improper bidding methods to extract $73 million in excess profits over several months in 2010 and 2011.
Officials with the ISO said they've recovered $20 million so far by withholding funds from settled power trades.
Morgan officials weren't immediately available for comment.
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