Receiving Wide Coverage ...
JPM Energy-Market Allegations: The Federal Energy Regulatory Commission released a two-page document on Monday, detailing its (already widely reported) accusations against JPMorgan Chase for energy-market manipulation. Per the Journal, "the document describes several trading schemes, including submitting bids that 'falsely appeared' attractive to electricity-system operators and led to payments to the bank valued at 'tens of millions of dollars at rates far above market prices.'" The FT notes the allegations "echo the electricity-market manipulation schemes perpetrated by Enron, the bankrupt energy company." The allegations are expected to precede a formal settlement announcement, which could come essentially any minute now. Papers must be talking to different anonymice because estimates of the settlement's cost vary. The Journal pegs the associated fine to be "roughly $410 million." Dealbook says the settlement "could cost the bank as much as $500 million" and the FT estimates the settlement to be "about $400 million", which would be lower than the fine FERC levied against Barclays earlier this month. JPM was declining to comment on the allegations on Monday. American Banker readers will recall the bank announced plans on Friday to sell or spin off its physical commodities unit, ahead of increasing regulatory scrutiny.
A Self-Regulator for Virtual Currencies: Several leading industry participants are set to launch the Committee for the Establishment of the Digital Asset Transfer Authority today, a self-regulatory organization designed "to promote common rules" for virtual currencies like Bitcoin. The Journal calls the move "an effort to respond to state and federal regulators, who are trying to monitor transactions in virtual currencies for illegal activity." In a BankThink column, executive director of the Bitcoin Foundation Jon Matonis welcomed the organization, but also acknowledged there were risks associated with its formation. "Although SROs can be extremely beneficial in advancing an industry, clear political lines must be drawn to mitigate the risk that an SRO would be co-opted by government and this is where it gets tricky," he writes.
Tourre Trial Update: The defense for Fabrice Tourre, the ex-Goldman Sachs trader on trial for allegedly defrauding investors in a mortgage deal, rested yesterday
after calling no witnesses. Dealbook says the move highlights "the confidence that Mr. Tourre's lawyers have in their fight against the lawsuit by the government." The Journal says the "closely-watched case" is "likely to go to a federal jury in Manhattan by midweek."
European Earnings Potpourri: Barclays dominated overseas earnings news by (as predicated) announcing plans to address its current capital shortfall. These plans include a move to raise £5.8 billion through a rights issue of stock and up to £2 billion from sale of "contingent capital" bonds that convert to shares in times of stress, the Journal reports. The bank also reported that its "second-quarter revenue fell less than 1%, to £7.3 billion", Dealbook reports, largely due to legal costs. Elsewhere, UBS reported its second-quarter profit rose 32% and Deutsche Bank said its profits fell by half in the second quarter, due, in part, to legal costs and lower trading fee revenue.
Wall Street Journal
The Securities and Exchange Commission wants to introduce a new guidepost for retail investors in the municipal-bond market, but "has struggled to reach agreement with another agency, the Municipal Securities Rulemaking Board, over how best to structure such a benchmark and ensure it can't be manipulated," (like the benchmark interest rate Libor was), some anonymice tell the paper.
New York Times
A federal judge has said Federal Reserve Chairman Ben Bernanke should testify in the lawsuit former AIG chief executive Maurice R. Greenberg has brought against the U.S. government over the terms of the firm's 2008 bailout.
Columnists Steven M. Davidoff and David Zaring argue that hedge fund Perry Capital's lawsuit against the government over the bailout of Fannie Mae and Freddie Mac may spell trouble for the U.S. "Attempts to fix mistakes made in the depths of the financial crisis are going to be harder now that the courts and Congress are not as scared of challenging the executive branch as they were back then," they write. "This is normal cycle of these crises. The executive branch gets more latitude during the time, but afterward there is a demand for accountability."
