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FBI opens probe into JPMorgan losses

Tampa (Florida) May 15 (Reuters): The FBI has opened a probe into trading losses at JPMorgan Chase & Co, stepping up the pressure on the bank after the US Securities and Exchange Commission and the Federal Reserve said they were also looking into the wrong-way bets that led to the losses.

Yet at the same time, shareholders backed embattled Chief Executive Jamie Dimon at the bank’s annual shareholders meeting in Tampa, Florida, today, voting against a proposal to split the jobs of CEO and chairman.       

Though shareholders mostly gave Dimon a pass, pressure mounted on the bank to reclaim some of the millions of dollars it paid to the executives who oversaw the trades. Dimon said JPMorgan would pursue more disciplinary action against those who were responsible.

“We will do the right thing. That may well include clawbacks,” he told reporters after the annual meeting.       

The timing on any such move was not clear, though, and the various regulatory probes could add complications. A source familiar with the FBI investigation, opened by the agency’s New York office, described it as being at a preliminary stage.

The probe was seen in some quarters as necessary.

“The FBI looks for evidence of crimes and goes after people who it alleges are criminals. They want to send people to jail. The SEC pursues all sorts of wrongdoing, imposes fines and is half as scary as the FBI,” said Erik Gordon, a professor in the law and business schools at the University of Michigan.

In Washington, US treasury secretary Timothy Geithner said JPMorgan’s losses strengthened the case for reform. “I think this failure of risk management is just a very powerful case for ... financial reform,” Geithner told an event sponsored by the Peterson Foundation.

 
 
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