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July 30, 2013

JPMorgan Chase Weighs Sale Of Physical Commodities Units Amid Controversy

JPMorgan Chase, the largest U.S. bank, said Friday it may sell its prized physical commodities business, just three years after it aggressively expanded into the sector, as authorities probe whether big banks are using their holdings of raw materials to manipulate commodities markets.

JPMorgan said it may sell or spin off assets ranging from raw materials such as oil and copper to warehouses that store aluminum and other metals, energy tolling agreements, interests in power plants and wind farms, trading operations, and assets used to transport the commodities. The bank said it will continue to provide financial products tied to commodities, such as derivatives, and will continue to house and trade precious metals such as gold.

The surprise announcement follows a July 16 Huffington Post story that detailed how a coalition of beer brewers such as MillerCoors, automakers, and other companies that depend on metals, including Boeing, Coca-Cola, Dr. Pepper Snapple Group and Reynolds Consumer Products, has accused big banks, including JPMorgan and Goldman Sachs, of manipulating the aluminum market, costing consumers billions of dollars in unnecessary charges and fueling regulatory concerns on both sides of the Atlantic. The allegations prompted a Senate probe into Wall Street’s expansion into the commodities business as concerns multiply over whether the broader economy is being hurt by banks using important raw materials to benefit their bottom lines.”

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Read full Huffington Post article here

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