Jpmorgan Claim Of Possible Trader Intent May Help Bank

JPMorgan Chase & Co. (JPM)’s announcement that an internal inquiry may show “intent” to misprice trades in a unit that lost $5.8 billion may help a U.S. investigation while putting distance between management and any wrongdoers.

“E-mails, voice tapes and other documents, supplemented by interviews” were “suggestive of trader intent not to mark positions where they believed they could execute,” the bank said in a presentation yesterday as it reported net income fell 9 percent to $4.96 billion. “Traders may have been seeking to avoid showing full amount of losses,” the bank said, noting management had concerns about the integrity of the prices used. The bank didn’t provide evidence to support the allegations. The U.S. Department of Justice and the Federal Bureau of Investigation in New York in May began a probe of the bank’s trading losses, a person familiar with the matter said. The Securities and Exchange Commission and the Commodity Futures Trading Commission, which regulates derivatives trading, are also examining New York-based JPMorgan’s trading activities, according to people familiar with those probes.

The largest U.S. bank by assets restated first-quarter results to reduce net income by $459 million after a review of the prices used in the unit. Yet multibillion-dollar losses and an internal report by the bank are just the beginning of any federal case, said Sam Buell, a former U.S. prosecutor in New York who worked on the Enron Corp. Task Force and is now a professor at Duke University School of Law.

Bloomberg