http://www.marketwatch.com/story/jp-morgans-blythe-masters-withdraws-from-cftc-panel-2014-02-07-114491433
J.P. Morgan's Blythe Masters Withdraws From CFTC Panel
By Andrew Ackerman , The Wall Street Journal
WASHINGTON—J.P.
Morgan Chase JPM
+0.25% &
Co. commodities chief Blythe
Masters withdrew from a regulator's advisory panel a day after
her appointment was disclosed amid Democratic lawmaker objections to her
involvement, people familiar with the matter said.
The lawmakers expressed concern about Ms. Masters's participation
in the Commodity Futures Trading Commission panel given her
role presiding over a unit accused of manipulating power markets. Last summer,
J.P. Morgan paid a $410 million fine to settle the accusations by a federal
electricity regulator. The settlement prompted the Justice Department to open its own investigation of
the firm's energy practices. The bank didn't admit any wrongdoing as part of
the settlement.
The CFTC's disclosure Thursday that Ms. Masters had been appointed
to its global markets advisory committee prompted calls to the CFTC by aides to
senior Democratic lawmakers, the people familiar with the matter said.
Lawmakers and their aides were "surprised" that a
regulator would invite an individual whose division allegedly manipulated
markets to act as an adviser on the regulation of commodities, one Senate
Democratic aide said.
Acting CFTC Chairman Mark
Wetjen and Ms. Masters spoke by phone and both agreed her
appointment "wouldn't be good at this time," a CFTC official said.
Mr. Wetjen had earlier invited Ms. Masters to participate on the panel. Mr.
Wetjen declined to comment through a spokesman.
A J.P. Morgan official said Ms. Masters's decision to step down
came after she realized the workload associated with the sale of the bank's
physical commodities business would make it hard for her to participate on the
panel. The bank plans to complete the sale in the first half of 2014. The
official said the bank would offer another executive to serve on the panel.
The global markets committee, which includes industry executives,
consumer advocates and academics, advises the CFTC on the overseas application
of the agency's rules. It is set to meet Wednesday to discuss the CFTC's plan
to impose its swaps rules overseas, something big banks have largely opposed.
While in her 20s, Ms. Masters was among the team of J.P. Morgan
bankers who helped breathe life into the market for credit-default swaps, which
aided the bank in removing risk from its books.
Credit-default swaps are insurance-like contracts that pay out
when a country or company defaults on its debt.
The CFTC has pushed to make the swaps market more transparent and
safer in the wake of the financial crisis, when banks' swaps trades soured. The
CFTC's efforts have prompted blowback from the industry, particularly guidance
clarifying that overseas banks must adhere to CFTC rules if they book a swaps
deal abroad but use U.S.-based personnel to arrange, execute or negotiate the
transactions. Three industry groups have filed suit against the agency over its
guidance.
The global markets panel includes executives from other large
banks, including Robert
Klein , managing director and associate general counsel at
Citigroup C
+2.26% Inc.,
and Samara Cohen
, managing director of the securities division at Goldman Sachs Group GS +0.11% Inc.
Christian
Berthelsen contributed to this article.
Write to Andrew Ackerman at andrew.ackerman@wsj.com
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