FBI begins probe into JP Morgan

GENEVA, SWITZERLAND – The US Federal Bureau of Investigations has opened a preliminary inquiry into a $2 billion trading loss at JP Morgan Chase, which led to the resignation Monday 14 May of the bank’s chief investment officer, Ina Drew.

Shareholders defended the investment bank’s chief Jamie Dimon at the annual general meeting, rejecting a motion intended to split his CEO and chairman roles. The vote comes amid revelations of risky derivatives trades made using the bank’s own assets, which led to the losses.

The FBI investigation is widely seen as an expected public step, given the ongoing debate in Washington on banking regulation. Reuters cites Treasury Secretary Timothy Geithner, addressing an event sponsored by the Petersen Foundation, “I think this failure of risk management is just a very powerful case for … financial reform.”

Meanwhile, Dimon promised shareholders to take further disciplinary measures against those responsible for losses at the bank.

Shares at the bank have fallen sharply since losses were exposed last week, after having outperformed most competitors in the past year.

Links to other sources: Times of India, ABC, Sydney Morning Herald