Things just went from bad to worse for JP Morgan Chase. Losing $2 billion is bad enough, but now it turns out the SEC is looking into the bank's trading practices as possible "civil violations" in addition to the "egregious mistakes" CEO Jamie Dimon has already conceded.
Dimon's already facing calls for his resignation after the landmark loss his bank registered in a late SEC filing Thursday. If the Securities and Exchange Commission finds violations in its probe, that will likely increase the pressure on the "King of Wall Street" to step down. According to Ben Protess and Susanne Craig in The New York Times' DealBook, who broke the story, "the case, which is being run out of New York, will likely examine the bank’s past regulatory filings about the internal unit that placed the trades — as well as recent statements from the firm’s top executives."
Regulators will likely be especially interested in the activities of the bank's chief investment office, which Bloomberg reported last month had gotten heavily into proprietary trading, putting the firm's own money on increasingly risky speculative bets. That's not illegal by itself, but it opens up the possibility of unethical behavior. For example, look at Jon Corzine's in trouble for allegedly ordering customer money to be used to cover losses at MF Global. It's not the same situation, but it's similar in that the bank did something unethical in order to cover up irresponsible losses. And that was only $200 million. The SEC investigation into JP Morgan is in an early stage, but Dimon had sure better hope its books are clean.
This article is from the archive of our partner The Wire.