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JPMorgan Chase has engaged a former head of enforcement at the Securities and Exchange Commission just as the bank is facing an investigation by the markets watchdog.
As probes were confirmed into the $2bn in trading losses disclosed by the bank this month, JPMorgan said it had hired the services of William McLucas, a lawyer at WilmerHale, who as director of enforcement at the SEC between 1989 and 1998, served the longest term as the top policeman on Wall Street.
The assignment means that JPMorgan now directly or indirectly employs two of the past five SEC enforcement directors. Stephen Cutler, who served in the role from 2001 to 2005, is employed by the bank as general counsel.
JPMorgan is facing inquiries from regulators, Congress and the justice department into the $2bn in losses incurred by a London-based trading unit and their disclosure of events.
Mary Schapiro, SEC chairman, confirmed on Tuesday that the watchdog was investigating whether the bank’s earnings statements and regulatory reports were “accurate and truthful”.
“When they talked about their potential … risks that they face as a business [and] when they talk about potential losses under their [value-at-risk model],” Ms Schapiro said, “we are very focused on the accuracy and timeliness of that disclosure.”
Gary Gensler, the US Commodity Futures Trading Commission chairman, this week confirmed that it, too, was reviewing JPMorgan’s activities. Mr Gensler declined to give details of the investigation but told lawmakers on Tuesday that the bank’s chief investment office’s trading activities in credit derivatives “come under our anti-fraud and anti-manipulation regime”.
Both officials said they first learnt of JPMorgan’s trading activity through news reports in early April.
JPMorgan executives have said the company acted appropriately in disclosing the losses. Mr Dimon had previously dismissed the trading unit’s activity as insignificant.
Mr McLucas, who was not available for comment, is a partner at WilmerHale. Mr Cutler worked at the same law firm before joining JPMorgan in 2006. Mr McLucas’s assignment was first reported by Bloomberg.