Millions of dollars in penalties slapped on some of the world’s biggest banks, including JPMorgan Chase, by U.S. regulators are the result of policing powers established after the 2001 collapse of Enron Corp.
Bloomberg reports that within the past month, the Federal Energy Regulatory Commission, acting on recommendations from a 200-person enforcement unit assembled in the past three years, proposed fines on Barclays and Deutsche Bank for manipulating energy trades. The agency on November 14th revoked J.P. Morgan Ventures Energy Corp.’s right to trade power for six months next year - the first such sanction for an active market participant.
'I wouldn’t say that we’re picking on the banks', FERC Chairman Jon Wellinghoff said in an interview. 'We’re going after anybody who’s involved in manipulative or fraudulent activity in these markets'.
FERC didn’t always wield such muscle. Its authority expanded after the California power crisis of 2000-2001, when Enron traders’ actions triggered rolling blackouts. In 2005 Congress enacted a sweeping energy law that gave the FERC the ability to go after fraud and manipulation. It also gave the agency the authority to impose fines as high as $1m a day for those who tamper with electric-grid reliability.
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