CNBC is reporting that the Department of Justice is in "advanced stages" of a criminal probe into the JPMorgan Chase "London Whale" trades, investigating whether former traders mismarked positions in an effort to disguise the size of losses that have reached more than $6 billion.
BREAKING: DOJ in advanced stages of criminal probe into JPM whale traders, probing whether fmr. traders mismarked positions - @katekellycnbc
— CNBC (@CNBC) March 22, 2013
CNBC's report came via tweet from finance reporter Kate Kelly. She later appeared on the network's "Fast Money" show, asserting that the DOJ is "looking deeply at questions of whether certain traders mismarked intentionally and ultimately hid losses." Rather than describing criminal charges as a certainty, she said the investigation "could be the basis for a securities fraud claim of the criminal nature."
The Justice Department did not immediately respond to a request for comment from The Huffington Post and the account could not be independently confirmed.
In a securities filing last month, JPMorgan disclosed that a wide range of regulatory and law enforcement agencies, including the Justice Department and the Securities and Exchange Commission, were investigating the bank over the trade, which sparked a Senate investigation into wrongdoing at the bank and tarnished chief executive Jamie Dimon's once sterling reputation.
But those filings made no mention of potential criminal charges.
The Justice Department has authority to bring criminal charges against banks and individuals accused of defrauding investors. But it has rarely done so in recent years, drawing withering fire from critics who say the DOJ has failed in its obligation to hold accountable those responsible for the financial crisis.
The report comes a week after the Senate Subcommittee on Investigations released a damning 300-page report that included extensive documentary evidence suggesting that JPMorgan traders attempted to disguise the size of rapidly-mounting losses in the bank's Chief Investment Office. The trade involved outsized bets by Bruno Iksil on financial instruments known as credit default swaps.
The Senate report also criticized top bank executives, including Dimon, for downplaying the risk of the trade, even as losses were rapidly mounting.