JPMorgan Disclosed Possible Misconduct To Feds Ahead of Earnings!

• JPMorgan disclosed possible misconduct to feds ahead of earnings! 
  By Matthew Goldstein and Jennifer Ablan 
  (Reuters) – In a matter of days, the two-month-old criminal investigation into a $5.8 billion trading loss at JPMorgan Chase & Co. — known as the “London Whale” blunder — was transformed from dormant to potentially explosive.
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  Last Thursday, the day before JPMorgan reported its highly anticipated second-quarter earnings, the bank informed U.S. authorities that an internal investigation had found evidence that three London traders may have tried to hide the losses in some of their positions, said people familiar with the matter.
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  Late on Thursday evening, JPMorgan also decided it needed to restate its first-quarter earnings as a result. The bank’s disclosure has breathed new life into the criminal investigation that up until last week lacked evidence of a smoking gun pointing to wrongdoing in the bank’s Chief Investment Office, said three people familiar with the matter.
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  Before last week’s disclosure, the criminal probe largely had focused on the personal trading of some CIO traders, two of those sources said. The authorities were looking for evidence that some in London may have sold shares of JPMorgan in advance of the firm’s May 10 disclosure that it could lose a minimum of $2 billion on the derivatives trades gone awry.
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  Now the investigation is focused on whether three JPMorgan employees in London committed fraud in reporting on their transactions. The bank is cooperating with authorities.
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  JPMorgan’s chief executive, Jamie Dimon, and some of his top lieutenants did not learn about the potential misconduct by some CIO employees until early last week, said these sources, who were not authorized to speak publicly on the matter.
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  A federal prosecutor assigned to the investigation did not return calls seeking comment. A U.S. Securities and Exchange Commission attorney overseeing the matter also did not return phone calls.
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  The bank learned of the potential wrongdoing from lawyers with WilmerHale, the outside counsel hired by JPMorgan to investigate the matter. The law firm has reviewed thousands of emails and tens of thousands of recorded conversations between the traders and also interviewed some of the traders.
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  The WilmerHale internal review found that “traders may have been seeking to avoid showing the full amount of losses,” according to a presentation the bank released on Friday. The presentation also said the internal review found “a material weakness” in the valuations the CIO office had used for some of the more esoteric derivatives it had traded in London.
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