Power regulator's JPMorgan case could be on summer simmer

Fri May 31, 2013 7:09am EDT
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By Patrick Rucker and Scott DiSavino

WASHINGTON/NEW YORK (Reuters) - Even before the chief U.S. power market regulator announced his resignation this week, the agency pursuing a contested probe against JPMorgan Chase & Co (JPM.N: Quote) for alleged market manipulation had good reason to take its time building the case.

The bank, already embroiled in a public legal battle with the Federal Energy Regulatory Commission (FERC) over disclosing certain emails, alerted investors earlier this month that it expected FERC to move against the bank for trading activities in electricity markets. That followed the leak of FERC's initial findings, raising expectations of near-term action.

Yet former officials and legal experts say recent events could give FERC cause to build its case for several more months, taking time to evaluate the legal scope of its oversight after an unexpected set-back in court and to consider the next step in a high-profile case against Barclays (BARC.L: Quote) that has gone quiet.

And now, to await the replacement for its chairman, who will step down after a period of unprecedented action.

Chairman Jon Wellinghoff, who joined the commission in 2006 just a year after Congress vastly expanded FERC's powers to pursue market manipulation after the Enron scandal, confirmed his resignation from the post on Wednesday. He will remain in the position until a replacement is confirmed.

While much of the enforcement work has fallen to former U.S. Attorney Norman Bay, Wellinghoff's leadership since 2009 has coincided with a series of high-profile actions and settlements against big powers in the electricity market.

"Unless you're facing irreparable loss, there is no need to hurry," said Susan Court, FERC's director of enforcement from 2005 through 2009.

TIME TO SETTLE?   Continued...