“These investigations are in the early stages and the firm is cooperating with the relevant authorities,” the New York-based company said today in a quarterly filing with the U.S. Securities and Exchange Commission.
JPMorgan and Citigroup Inc. (C) put their top London currency dealers on leave after regulators probing the manipulation of foreign-exchange rates started investigating the traders’ use of an instant-message group, three people with knowledge of the moves said this week.
Regulators are focusing on an instant-message group the traders set up to share information about their positions and client orders over a period of at least three years, four people with knowledge of the probe said last month. The roster of banks in the group changed as the men moved firms and also included Barclays Plc, Royal Bank of Scotland Group Plc and UBS AG, three people with knowledge of the communications said.
Investigators are weighing whether the messages amounted to attempts to manipulate the market, two people said. The five firms account for about 47 percent of the $5.3 trillion-a-day foreign-exchange market, according to a May survey by Euromoney Institutional Investor Plc. Two other traders, who weren’t part of the conversations and who asked to not be identified because they do business with those involved, said that they and others in the market referred to the message group as “The Cartel.”
JPMorgan is seeking to resolve mounting litigation and probes that last month led it to announce a $7.2 billion charge and the first quarterly loss under Chief Executive Officer Jamie Dimon, 57. The New York-based bank already has tapped $8 billion of $28 billion in reserves set aside since 2010 to cover legal costs.
The firm has negotiated in past weeks with the U.S. Justice Department over a proposed $13 billion settlement of state and federal mortgage-bond probes, people familiar with the discussions have said. Part of those talks were resolved Oct. 25 as the bank agreed to pay $5.1 billion to settle claims from the Federal Housing Finance Agency that it mis-sold home loans and mortgage-backed securities to Fannie Mae and Freddie Mac.
JPMorgan disclosed in August that the U.S. Securities and Exchange Commission had sought information on hiring practices in Asia. While the bank settled an energy regulator’s market-manipulation probe in July, the Justice Department has been examining whether criminal laws were violated, a person briefed on that case said in August.
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