— Michael Hiltzik had a good column two weeks ago on allegations that JPMorgan Chase manipulated California energy markets:

The Federal Energy Regulatory Commission, the regulator of the ISO and its trading markets, has started a formal investigation into Morgan’s allegedly manipulative energy deals in California and with the Midwest ISO, which covers 11 states from Michigan to Montana.

Forget JPMorgan’s well-publicized multibillion-dollar trading loss in derivatives; this trade turned a handsome profit, and it came directly out of electric customers’ hides. The toll may not have amounted to much for each of the 37 million men, women and children in California. But collectively it’s a massive, illegitimate tax on the entire state.

What’s worse, it shows that we haven’t learned anything from Enron’s bogus energy trading, the disclosure of which helped destroy that firm in 2001 and land several of its executives in jail. To the extent it was designed to exploit loopholes in energy trading rules, experts say, the scheme allegedly perpetrated by JPMorgan Ventures Energy Corp. is cut from the same cloth as Enron’s infamous “fat boy” swindle, which cost the state’s ratepayers an estimated $1.4 billion in 2000.

This is one to watch.

— The Journal’s Michael Rapoport is good to spotlight how prosecutors have failed to use a key tool lawmakers gave them ten years ago after a wave of corporate scandals: Sarbanes-Oxley’s false certification provision.

That Bush-era law makes it a crime for CEOs to sign off on financial returns that they know are false. So, for instance, Dick Fuld and Repo 105 seem like a good place to start if the feds were interested in making such a case.

For example: Richard Fuld, former CEO of Lehman Brothers Holdings Inc. A bankruptcy examiner’s report on Lehman’s 2008 collapse said there was enough evidence to support claims that Mr. Fuld failed to ensure the firm’s quarterly reports were accurate, because he knew or should have known Lehman had cut its balance sheet through questionable transactions. But the government hasn’t charged Mr. Fuld with false certification or other wrongdoing. His attorney couldn’t be reached for comment.

There also haven’t been any charges against James Cayne, Bear Stearns Cos.’ ex-CEO, which spiraled into a liquidity crisis that led to a 2008 forced sale to J.P. Morgan Chase & Co. Mr. Cayne and other Bear executives recently agreed to a $275 million settlement of shareholder litigation accusing them of misleading investors about the firm’s finances—including allegations that Mr. Cayne falsely certified Bear’s financial reports.

The Wall Street Journal had a bit of a miss in its front-page story on the latest electronic markets screw-up:

The cumulative effect has been to further erode faith among investors big and small in the reliability of trading, magnifying the woes inflicted by a decade of lousy returns.

This seems true but it’s not anymore. The Dow is above 12,800 today, 54 percent higher than it was a decade ago when it was at about 8,300.

If you include dividends, the average annual return on the Dow was 7 percent over the past decade (assuming the payouts were reinvested, which is hardly always the case). After factoring in inflation of 28 percent over that span, it’s still a 4.4 percent return.

Of course, that’s only if you popped in exactly a decade ago, somehow timing the market near its secular bottom. Your real returns are far lower if you came in earlier or later.


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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.