A US bank is to pay $410 million (£270.8m) to settle allegations it manipulated energy markets in California and the Midwest from September 2010 to November 2012.

The US Federal Energy Regulatory Commission (FERC) said JPMorgan Ventures Energy Chase Corporation (JPMVEC) would pay the amount in “penalties and disgorgement” to taxpayers for allegations of market manipulation from the company’s bidding activities in the electricity markets. It alleged JP Morgan’s trading practices drove up electricity prices.

Under the agreement, the company will pay a civil penalty of $285 million (£188.3m) to the US Treasury and $125 million (£82.6m) in “unjust profits”. The first $124 million (£82m) of the profits will go to the California Independent System Operator (ISO), which operates the electricity market in the state, while the rest will go to the Midcontinent Independent System Operator (MISO).

The FERC said in a statement: “FERC investigators determined that JPMVEC engaged in 12 manipulative bidding strategies designed to make profits from power plants that were usually out of the money in the marketplace. In each of them, the company made bids designed to create artificial conditions that forced the ISOs to pay JPMVEC outside the market at premium rates.

“FERC investigators also determined that JPMVEC’s bids displaced other generation and altered day ahead and real-time prices from the prices that would have resulted had the company not submitted the bids.”

According to the FERC, the bank “neither admits nor denies the violations” and reports claim JPMorgan is “pleased to have reached an agreement with FERC to put this matter behind it”.

Earlier this month Barclays Bank and four of its traders were also ordered to pay $453 million (£298m) by the US energy regulator for allegedly manipulating electricity prices.