News media in the United States are reporting that the federal government has opened a criminal investigation into the more than $2 billion trading loss sustained by the JPMorgan Chase & Co. investment bank.
Sources told various news outlets on Tuesday that the Justice Department probe is at an early stage. The investigation is being started only days after JPMorgan's chairman and chief executive, Jamie Dimon, disclosed the loss that stemmed from complex trading transactions in the London office of the U.S.-based firm.
Dimon told J.P. Morgan stockholders at the company's annual meeting that the huge financial setback was the result of "self-inflicted" mistakes by company executives, saying, "This should never have happened."
Despite the loss, shareholders gave Dimon a vote of confidence, rejecting a proposal to strip him of his title of chairman of the board, and endorsed his $23 million pay package for last year.
The fallout from the loss began on Monday with the bank's chief investment officer, Ina Drew, announcing her retirement after 30 years with the firm. She oversaw the office where the transactions occurred. Other officials are also expected to leave soon.
Dimon, who said the transactions were "poorly reviewed, poorly executed and poorly monitored," has strongly opposed new U.S. laws aimed at imposing tighter controls on complex financial transactions involving millions of dollars.
During an appearance on ABC television's "The View," U.S. President Barack Obama said the JPMorgan situation proves that strong regulations are needed to keep the nation's financial sector from making the same mistakes that led to the 2008 global economic crisis.
"This is the best or one of the best managed banks," Obama said. "You could have a bank that isn't as strong, isn't as profitable making those same bets and we might have had to step in, and that's exactly why Wall Street reform is so important."