Pam Martens: JPMorgan rushed to hire trader who advertised market-rigging ability

By Pam Martens
Wall Street on Parade
Wednesday, December 3, 2014

On April 29, 2010, at 7:47 in the evening, Francis Dunleavy, the head of Principal Investing within the JPMorgan Commodities Group, fired off a terse email to a colleague, Rob Cauthen. The email read: "Please get him in ASAP."

The man Dunleavy wanted to be interviewed "ASAP" was John Howard Bartholomew, a young man who had just obtained his law degree from George Washington University two years prior. But it wasn't his law degree that Bartholomew decided to feature at the very top of the resume he sent to JPMorgan; it was that while working at Southern California Edison in Power Procurement, he had "identified a flaw in the market mechanism Bid Cost Recovery that is causing the CAISO" -- the California grid operator -- "to misallocate millions of dollars." Bartholomew goes on to brag in his resume that he had "showed how units in reliability areas can increase profits by 400 percent."

The internal emails at JPMorgan and Bartholomew's resume are now marked as Exhibit 76 in a two-year investigation conducted by the U.S. Senate's Permanent Subcommittee on Investigations into Wall Street's vast ownership of physical commodities and rigging of commodity markets. Senator Carl Levin, the Chair of the Subcommittee, had this to say about the resume at a hearing conducted on November 21:

"There's two things that I find incredible about this. First, that anyone would advertise in a resume that they know about a flaw in the system -- signaling that they're ready and willing to exploit that flaw. And second, that somebody would hire the person sending that signal."

JPMorgan not only hired Bartholomew, according to the Senate's findings, but within three months from the date of the email to Dunleavy, "Bartholomew began to develop manipulative bidding strategies focused on CAISO's make-whole mechanism, called Bid Cost Recovery or BCR payments." By early September the strategy to game the system was put into play. By October the JPMorgan unit was estimating that the strategy "could produce profits of between $1.5 and $2 billion through 2018." ...

For the remainder of the report:

http://wallstreetonparade.com/2014/12/jpmorgan-rushed-to-hire-trader-who...