Manhattan U.S. Attorney Preet Bharara's office is conducting a criminal investigation into whether JPMorgan Chase & Co. employees tried to obstruct an inquiry by the Federal Energy Regulatory Commission, according to Reuters, which cited unidentified people familiar with the probe.
The origin of the latest probe, which includes the Federal Bureau of Investigation, is as interesting as the news of its existence. Here's what the Reuters article said: "The impetus for the investigation, according to one of the sources, was in part a July 31 letter to FERC from Massachusetts Senator Elizabeth Warren and Massachusetts Congressman Edward Markey, both Democrats."
Their letter asked the agency why it let JPMorgan settle the case without admitting any violations and why it didn't file claims against any individuals. The bank paid $410 million to settle accusations that it manipulated power markets in California and the Midwest. Warren and Markey sent their letter the day after the commission disclosed the settlement.
One should hope that the Justice Department didn't need a letter from members of Congress to start asking questions here. (Then again, the article said the letter was "part" of the impetus.) All of the facts that the lawmakers cited were in the public domain. Months before reaching its settlement with JPMorgan, the energy regulator had accused the company of making factual misrepresentations during the course of its investigation, as the New York Times reported in May.
JPMorgan has denied that any of its employees lied during the FERC probe. And the agency didn't include any claims along those lines in its settlement with JPMorgan. However, the energy regulator did admonish the bank in its consent agreement by including this line: "Finally, in light of the record here, we remind all persons under investigation of the importance of candor and accuracy during all stages of market monitor inquiries and commission investigations."
Under the terms of a 2011nonprosecution agreement between JPMorgan and the Justice Department over antitrust allegations, JPMorgan pledged that for two years it would respond "truthfully and completely" to subpoenas or investigative demands by other government agencies (as if it was free to do otherwise once the two years were up). So if the government concluded that JPMorgan breached that agreement, the bank could be subject again to prosecution for the antitrust claims.
But as we all know, it's unlikely that the government would ever prosecute JPMorgan, for obstruction or anything else, because it's too big to fail. Maybe some of the bank's employees will come under scrutiny. But if the energy regulator couldn't see fit to file claims against any individuals, it's difficult to imagine the Justice Department would press criminal charges against them later.
Whatever the outcome, the public's best hope may be to simply find out what happened here. The Senate Permanent Subcommittee on Investigations, led by Senator Carl Levin of Michigan, has asked the energy regulator for records from its JPMorgan inquiry and settlement. In the event Levin holds hearings, the regulator may have as much explaining to do as anyone from JPMorgan.
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)