Regulator questions JPMorgan's financial statements

Regulators are reviewing JPMorgan filings prior to its $2 billion blunder that was announced earlier this month.

The Associated Press says the SEC is carefully scrutinizing the earnings statements and financial reports to uncover if they were ‘accurate and truthful.’

Mary Schapiro, chair of the agency, told the Senate Banking Committee Tuesday that the federal watchdog is also looking into what JPMorgan told investors about the risks before the ‘self-inflicted’ trading loss occurred.

 Schapiro and Gary Gensler, chairman of the Commodity Futures Trading Commission (CFTC), believes that the $2 billion trading loss is a clear indication that tougher rules should be imposed on the banking industry.  The CFTC is also investigating the banking giant’s risky move, the report confirms.  

But more hearings have been scheduled. On June 6, the Federal Reserve and Treasury Department will testify before the Senate panel.

The lender’s legal department is ready to face off regulators, however.

Bloomberg said yesterday that former agency enforcement chief William McLucas has been appointed by JPMorgan to help handle the string of regulatory probes following the bank’s trading misstep.  

McLucas currently serves as a partner at Wilmer Cutler Pickering Hale & Dorr, the law firm retained by JPMorgan after the announcement was made. McLucas headed up the commission’s enforcement unit during 1989-1998 and has reportedly worked with the bank’s general counsel, Stephen Cutler.