* Energy traders starting post-financial crisis funds
* Government regulations cut into bank trading profits
* FERC clamping down on power market manipulation
By Jeanine Prezioso
NEW YORK, Nov 29 Three natural gas and power
traders who had worked for JPMorgan Chase & Co and
Barclays Plc have teamed up to start a fund trading in
gas and power markets starting in January.
Stamford, Connecticut-based Cogent Energy Investment
Management LLC has three principals, Fletcher Sturm, Robert
Benson and Frank Ermis, all Enron alumni, according to a report
in the online publication SparkSpread.com.
Sturm is listed as a principal in the fund, according to
documents filed with the Connecticut Secretary of State, and had
previously worked at Barclays trading gas.
Benson and Ermis joined JPMorgan in 2007 from UBS as
executive directors for power trading in eastern markets and
natural gas trading in the west, respectively, according to a
statement from JPMorgan's website.
Benson then went to work for commodity trading merchant
Freepoint Commodities in Stamford, focusing on eastern power
markets from May 2011 until July 2012, a Freepoint spokesman
Attempts to reach the fund's principals were unsuccessful
and it could not be learned how much money the fund has under
The new fund comes at a time when commodity hedge funds have
sprung up from traders fleeing ailing banks and stringent
federal regulations governing proprietary trading.
U.S. energy regulators have also been clamping down on banks
they have accused of manipulating the California power market,
recently issuing strong measures against Barclays and JPMorgan.
BANKS UNDER FIRE YIELD NEW FIRMS
Energy traders have been leaving for commodity trading
merchants or to start their own funds as U.S. federal law
crafted after the 2008 financial crisis has cut into their
Freepoint Commodities itself was started by former RBS
Sempra Commodities executives with private equity backing in
2011, after Royal Bank of Scotland had to divest its
portion of the joint venture held with Sempra after it took U.K.
government bailout money.
More recently, a slew of banks including JPMorgan, Deutsche
Bank and Barclays have been accused of power market
manipulation by the U.S. Federal Energy Regulatory Commission
(FERC), which oversees electricity markets.
Late last month, FERC proposed a $470 million fine against
Barclays to settle allegations that the bank manipulated
California electricity markets.
Earlier this month, FERC suspended the ability of the energy
trading arm of JPMorgan to sell power at market-based rates for
six months from April 1, 2013, essentially preventing the bank
from profiting from competitive market prices.
JPMorgan misled regulators in responding to requests related
to a market manipulation investigation, FERC said.