JPMorga Chase & Co. (JPM), the biggest U.S. bank, has hired former U.S. Securities and Exchange Commission enforcement chief William McLucas to help respond to regulatory probes of the firm’s $2 billion trading loss, according to two people with knowledge of the assignment.
The lender’s May 10 announcement of the “self-inflicted” loss spurred reviews by the SEC, Commodity Futures Trading Commission, Office of the Comptroller of the Currency and Federal Bureau of Investigation. JPMorgan has said the losses may increase. Kristin Lemkau, a company spokeswoman, didn’t have an immediate comment on the hiring. The people requested anonymity because the appointment hasn’t been made public.
Investigators may focus on how JPMorgan disclosed the risk of losses, SEC Chairman Mary Schapiro said today in congressional testimony. The agency is studying the veracity of JPMorgan’s first-quarter reports, she said.
McLucas, a Washington-based partner at law firm Wilmer Cutler Pickering Hale & Dorr LLP, led the SEC’s enforcement division from 1989 to 1998. He represented board committees in the collapses of Enron Corp. and WorldCom Inc. McLucas, 61, didn’t reply to a phone call and e-mail seeking comment.
The losses occurred in a portfolio of credit investments at a London unit of JPMorgan’s chief investment office, which manages risks. The company used a trading strategy that was “flawed, complex, poorly conceived, poorly vetted and poorly executed,” Chief Executive Officer Jamie Dimon has said.
JPMorgan’s general counsel and most senior lawyer, Stephen Cutler, also previously served as the head of enforcement at the SEC. Cutler, 50, worked with McLucas at Wilmer from 2005 to 2007, before being hired by JPMorgan.
By Joshua Gallu and Dawn Kopecki
Courtesy of Bloomberg News