Siena prosecutors requested that JPMorgan Chase & Co. (JPM) stand trial for obstructing regulators as part of a wider probe into Banca Monte dei Paschi di Siena SpA’s purchase of Banca Antonveneta SpA, according to four people with knowledge of the matter.
Prosecutors allege JPMorgan withheld information from regulators about a 1 billion-euro ($1.3 billion) financing the New York-based bank arranged for Monte Paschi’s takeover of Antonveneta in 2008, said the people, who asked not to be identified because the request is not public.
JPMorgan failed to oversee employees properly, according to the indictment request, the people said. A judge will review the request at a date that’s to be determined. Prosecutors also are seeking indictments against former Monte Paschi managers for obstructing regulators, as well as market manipulation and falsifying filings, the people said.
JPMorgan should have informed the Bank of Italy that Monte Paschi had guaranteed it against losing money on the bond sale, the central bank said in an April 19 letter to prosecutors. The Bank of Italy said it may have withheld approval for the deal had it known about the indemnity.
“No claim was ever made under the indemnity, which only existed for a matter of days, including either for the benefit of JPMorgan or any of its employees,” the U.S. bank said yesterday in an e-mailed statement. “We believe that JPMorgan and its employees acted correctly at all times. We will defend this action vigorously.”
Monte Paschi bought Antonveneta from Banco Santander SA (SAN) in 2008 for 9 billion euros, 36 percent more than the Spanish lender paid for the Padua, Italy-based bank two months earlier.
JPMorgan Chief Executive Officer Jamie Dimon, 57, told employees on Sept. 17 to prepare for more legal woes while the bank undertakes an “unprecedented effort” to comply with regulations. In the U.S., the lender is in talks to pay about $11 billion by state and federal authorities to end investigations into its mortgage-bond sales practices, a person familiar with the discussions said last week.
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