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Our monied overlords

Tuesday, Jul 30, 2013

* From the Associated Press

U.S. energy regulators are accusing JPMorgan Chase & Co. of manipulating electricity prices in California and the Midwest in 2010 and 2011.

The Federal Energy Regulatory Commission said in an enforcement notice Monday that the bank used improper bidding strategies to squeeze excessive payments from the agencies that run the power grids in California and the Midwest. […]

FERC’s enforcement staff said its investigation had found improper trading practices were used at the company’s Houston-based subsidiary, JPMorgan Ventures Energy Corp.

The energy unit used five “manipulative bidding strategies” in California between September 2010 and June 2011, and three in the Midwest from October 2010 to May 2011, FERC said. The agency that runs the Midwestern power grid, now called the Midcontinent Independent System Operator, covers all or parts of 15 states and the Canadian province of Manitoba.

* From Bill Daley’s BusinessWeek bio

Mr. Daley served as Head of Corporate Social Responsibility at J.P. Morgan Chase & Co. from June 28, 2007 to 2010 and served as its Chairman of Midwest Region since May 2004.

I can’t help but wonder if the duties of the bank’s “Corporate Social Responsibility” unit would include making sure that its traders weren’t manipulating energy markets.

* In other news

A former employee of SAC Capital Advisors’ Chicago office was once part of an “insider trading group” at a rival hedge fund, according to an indictment filed on Thursday against SAC.

A source familiar with the matter said the hedge fund was Citadel. A Citadel spokeswoman said there was no such “insider trading group” at the firm.

Charges filed in U.S. District Court in New York on Thursday against prominent hedge fund manger Steven A. Cohen’s SAC Capital said his former employee, Richard Lee, moved from a firm, identified only as “Hedge Fund A” to SAC, despite a warning that Lee “was known for being part of Hedge Fund A’s ‘insider trading group.’”

The source familiar with the matter said “Hedge Fund A” is Citadel, the Chicago-based firm founded by Kenneth Griffin. Citadel managed roughly $13.3 billion at the end of 2012, according to a regulatory filing. Citadel was one of several hedge funds subpoenaed by federal authorities in 2010 as part of the government’s broader insider trading investigation.

Lee worked at Citadel from 2006 until he was fired in 2008, according to a spokeswoman for the firm.

* More response from Ken Griffin’s Citadel

Citadel, which has not been accused of any wrongdoing, defended itself against the allegation.

“Citadel does not have, and never has had, an ‘insider trading group,’” it said. “Citadel has strict rules against, and oversight designed to prevent, insider trading. Any suggestion to the contrary is baseless and without merit.”

Citadel elaborated on its reasons for firing Lee, which it said had nothing to do with insider-trading. Instead, the hedge fund said, Lee had violated its policies on internal transfers of positions.

“Mr. Lee’s actions would have impacted only his potential future compensation,” Citadel said. “Within hours, Mr. Lee’s misconduct was reported to Citadel management. Mr. Lee was immediately terminated.”

* And now for some good news. I sent this e-mail yesterday to Republican gubernatorial candidate Bruce Rauner’s spokesman. Rauner, as you may know, sits on the Civic Committee’s board…

Did Bruce ever contact any bond credit rating agency to ask them, suggest to them, etc. to downgrade Illinois’ bond rating? Did he ever contact any credit rating agency even to speak with them about Illinois’ bond ratings?

The response…


- Posted by Rich Miller        

  1. - Knome Sane - Tuesday, Jul 30, 13 @ 11:30 am:

    =Did Bruce ever contact any bond credit rating agency to ask them, suggest to them, etc. to downgrade Illinois’ bond rating? Did he ever contact any credit rating agency even to speak with them about Illinois’ bond ratings?=

    You might want to re-phrase that question: “Was Bruce part of a group of Civic Committee Board members who asked for a downgrade of Illinois’ rating?

  2. - Knome Sane - Tuesday, Jul 30, 13 @ 11:31 am:

    In his individual capacity he can honestly say “no”. But if he was part of a group, that’s another story.

  3. - abc123 - Tuesday, Jul 30, 13 @ 11:33 am:

    Go back to Bill Daley’s Amalgamated Bank days and you’ll find a rat’s nest of union filth he’ll be trying to explain.

  4. - PublicServant - Tuesday, Jul 30, 13 @ 11:34 am:

    You’re lucky you got a one word response out of Rauner. The monied have closed ranks after having had one of their minions (soon to be ex-minion) callously expose their “well placed” communications, er make that thinly veiled threats to advance their quite uncivic ideology.

  5. - Obama's Puppy - Tuesday, Jul 30, 13 @ 11:36 am:

    Hmmmmm, anyone have an NSA contact? Care to elaborate? Do you think it was reprehensible? What do you think about the fellow board members who did make the phone calls? If you had known, would you have advised them not to make the calls? Does any of your extensive financial holdings include being short on Illinois bonds? I could go on but I think I made my point.

  6. - MrJM - Tuesday, Jul 30, 13 @ 11:38 am:

    As some goof-ball noted earlier: All he has to do is convince the people of Illinois that a Daley who got rich at a Wall Street investment bank is the best person to represent their interests as governor — That’s all.

    – MrJM

  7. - Just a bloke - Tuesday, Jul 30, 13 @ 11:47 am:

    Corporate social responsibility is usually philanthropy. Policing that kind of behavior would fall to the compliance departnment and then rise to the corporate Ethics Board if issues were discovered.

    That’s not to defend Daley. He was still a too-big-to-fail banker who banked insider connections, which make his statements about outlandish insider benefits anywhere else laughable on its face.

  8. - CircularFiringSquad - Tuesday, Jul 30, 13 @ 11:51 am:

    Capt. Fax
    Now let’s ask CousinBrucey spoxster “did CousinBrucey trade any instrument/option/contract or loan capitol to others trading on the effort to crush the state credit rating?”

    Bet that will be a fun query to answer
    BTW the FERC is trying to nick Chase for $410 million smackers according the WSJ…wow BankerBilly will be in a sweat

  9. - youre-it - Tuesday, Jul 30, 13 @ 11:52 am:

    Not to be light on anybody here, but typically Directors of Corporate Social Responsibility (CSRs as they are called) are the ones who govern the corporation donations and make sure all the company assets and supply chain are “green,” etc.

    Not typically the ones who get involved in ethics, liability, and legality. That would most likely be the lawyers.

  10. - anon - Tuesday, Jul 30, 13 @ 12:06 pm:

    Like lawyer Ty Fahner’s involvement in “ethics, liability and legality?”

  11. - Anon. - Tuesday, Jul 30, 13 @ 12:15 pm:

    ==U.S. energy regulators are accusing JPMorgan Chase & Co. of manipulating electricity prices in California==

    So that’s where those old Enron traders went.

  12. - Anonymous - Tuesday, Jul 30, 13 @ 12:48 pm:

    another Question for Rauner
    Did you ever condition a contribution to a GA candidate on a pension vote?
    Speaking of NSA OP We do know all your phone and email records exist and in this case probable cause exiists

  13. - Shore - Tuesday, Jul 30, 13 @ 12:52 pm:

    corporate social responsibility is a new fancy term for brand management, public relations, legal issues, labor issues, lobbying, ect. Think of BP after the oil spill or when you see comcast sending employees to plant trees in parks, or the cubs hosting job fairs for high school kids.

  14. - Keyrock - Tuesday, Jul 30, 13 @ 1:02 pm:

    Rich, did you ever get a response from the Governor’s budget office to your question yesterday?

  15. - Rich Miller - Tuesday, Jul 30, 13 @ 1:03 pm:

    No, Keyrock, I haven’t yet.

  16. - wordslinger - Tuesday, Jul 30, 13 @ 2:07 pm:

    That JPMorgan Chase sure is a full-service bank: massive mortgage fraud, jacking electricity prices, fraudulent debt-collection practices, manipulating LIBOR, gambling with FDIC-backed deposits…..

    For crying out loud, if the Gangster Disciples pulled that stuff, the 82nd Airborne would be on the streets rounding them up.

    But as the Obama Administration has told us, the big banksters are The Bizarro Untouchables — they can’t be prosecuted criminally.

    Let’s be civil about this. A little cost-of-doing-business fine, no admission of guilt, and see you at Happy Hour, you rascals!

    I’m sure Outsider Bill and Original B Dimon had a nice talk about old times at the Jedi Wedding Reception on Promontory Point a few weeks back.

  17. - Arthur Andersen - Tuesday, Jul 30, 13 @ 2:37 pm:

    -the Jedi wedding reception on Promontory Point-


    The lovely bride’s firm is at the center at another of the biggest scams pulled on governments in the last couple decades.

  18. - wordslinger - Tuesday, Jul 30, 13 @ 2:50 pm:

    AA, Ariel? What did I miss?

  19. - Arthur Andersen - Tuesday, Jul 30, 13 @ 3:35 pm:

    word, yes. Ariel has been an “emerging investment manager” for about two decades or more. I’m all for programs to help startup and/or MBE companies get a shot at public business, but Ariel and a few others, mostly based in Chicago, have been riding the train way too long.

  20. - wordslinger - Tuesday, Jul 30, 13 @ 3:58 pm:

    AA, I had no idea.

    Yeah, John Rogers has been in business for himself now for about 30 years — I think he might make it.

  21. - Cod - Tuesday, Jul 30, 13 @ 5:43 pm:

    It seems surprising that the four Civic Committee officers would be acting on their own, without discussing it with the key activist members like Rauner who will run for governor.

    All Club members were sent a letter on Nov 14 2012 from Club chairman Miles White of Abbott Labs that outlined an intensified attack on pensions, including talking points, for the political effort of their group to force pension cuts as the path to solving the States fiscal problems. It doesnt mention that creating a sense of crisis by lowering Illinois ratings is a key tactic that will be applied in the next month.

    The letter said “as our legislators prepare to meet in December and January, WE WILL NOT ALLOW any politically acceptable half measures to be presented as reform. We will work tirelessly to make…reforms a reality” (My capitalization).

    So much for democracy. No mention of upholding pension contracts, of the revenue alternatives such as tax the super-rich, closing corporate tax loopholes, electronic trader transaction taxes, or even restructuring the pension debt to make it affordable.

    Perhaps the next question for CC member Rauner should be whether he knew that pressuring the rating agencies to downgrade Illinois bonds was part of CC tactics to cut pensions, or if the officers were authorized by the members to do whatever was necessary to achieve their goal.

    Ref: Bloomburg BNA:$file

  22. - wishbone - Tuesday, Jul 30, 13 @ 6:41 pm:

    “So that’s where those old Enron traders went.”

    Damn, my line.

  23. - wordslinger - Tuesday, Jul 30, 13 @ 7:05 pm:

    It should be noted that JPMorgan Chase is part of the ownership group that has controlling interest in Tribune Co., a hangover from its involvement in Zell’s hinky deal taking the company private.

  24. - Judgment Day - Tuesday, Jul 30, 13 @ 9:32 pm:

    If you really want a story on JPM Chase, here’s the story:

    When you’ve paid $6.9 billion dollars in fines and settlements since April, 2011, and there’s at least 8 separate federal investigations still under way, well one hardly comes across as a bastion of integrity. Maybe that’s what Bill Daley should be questioned on. Is he really sure he want to campaign on his time at JPM Chase?

    At least Bruce Rauner gave a simple answer. No weasel wording. Let’s see if Daley and/or Quinn can give the same type of unambiguous answers when they get questions.

  25. - Judgment Day - Tuesday, Jul 30, 13 @ 9:52 pm:

    Re: Bill Lee and SAC Capital Advisors.

    All about making contacts and gathering information. Citadel (among many others) was just trying to compete, but they weren’t anywhere as ‘efficient’ at it as was SAC Capital Advisors.

    When you are SAC Capital Advisors and are charging 3%/30% up to 3%/50% vrs. everybody else at 2%/20%, better have returns to match. Got to find and trade on those market ‘inefficiencies’ before everybody else.

    Course, the Fed’s have other terminology for it. Oops. This is going to be fun.

  26. - wordslinger - Tuesday, Jul 30, 13 @ 10:32 pm:

    JD, great link on JPMorgan Chase. Great as in maddening and depressing.

    When you see the whole schmear like that, the bank appears to be nothing but a $2.5 trillion ongoing criminal enterprise — but one that the attorney general has said publicly is beyond the reach of criminal law.

    The most generous assessment would be that banks like JPMorgan Chase are simply too big to manage or regulate. They’re a threat to us all, as they’ve proven time and again.

    That’s not some bomb-throwing Bolshevik opinion. That’s the consensus of some of the world’s leading uber-capitalists, including former heads of the biggest banks and the Federal Reserve.

Sorry, comments for this post are now closed.

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