US Fed forced JP Morgan to sell Henry Bath, report shows

The US Federal Reserve forced JP Morgan to sell its Henry Bath warehouse, rejected applications by Goldman Sachs and Morgan Stanley to trade physical iron ore, and refused an application by Goldman Sachs for a joint venture sugar plant in Brazil, a US Senate report revealed.

“Wall Street involvement with physical commodities”, a 396-page report by the US Senate's permanent subcommittee on investigations, said that JP Morgan applied to operate Henry Bath - which it had acquired in 2010 as part of a larger acquisition from RBS Sempra - as a complementary activity. This concerns a case-by-case process where financial holding companies are authorised to engage in a variety of physical commodity activities found to be complementary to their trading in commodity-related financial instruments. The Fed gave its approval to 13 financial holding companies to engage in various categories of complementary activities in this way, including purchasing and selling physical commodities in the spot markets, making and taking delivery of physical commodities to settle derivatives transactions, entering into energy tolling agreements, and providing energy management services. However, it said it would reject JP...


Andrea Hotter

November 20, 2014

15:35 GMT

New York