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August 20, 2013

J.P. Morgan Faces New Probe on Energy Trades

The Justice Department is investigating whether J.P. Morgan Chase & Co. manipulated U.S. energy markets, according to people familiar with the case, marking the latest legal hurdle for a bank already facing a mountain of litigation and regulatory scrutiny.

J.P. Morgan last month agreed to pay $410 million to settle allegations raised by the Federal Energy Regulatory Commission that the bank manipulated markets in California and the Midwest. J.P. Morgan, the nation’s largest bank by assets, didn’t admit to wrongdoing as part of the settlement.

The Justice Department decided to examine J.P. Morgan’s energy practices in recent weeks as that settlement was being wrapped up, according to the people familiar with the probe. The people cautioned the investigation is still in its early stages and the outcome uncertain. J.P. Morgan declined to comment on the probe, but a spokesman said: “As we’ve said previously, we’re working hard to remediate controls issues, strengthen business practices and address regulatory concerns.”

The probe, according to the people, is being handled by U.S. Attorney Preet Bharara, who this month accused two former J.P. Morgan employees who worked alongside a former trader known as the “London whale” of hiding losses on runaway bets in 2012 that cost the bank more than $6 billion.”

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Read full Wall Street Journal article here

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