Futures Regulator Pursues J.P. Morgan Over 'Whale' Trades

http://online.wsj.com/article/SB10001424127887324665604579081220984237640.html



The Commodity Futures Trading Commission, pursuing a probe into last year's "London whale" trades even as other agencies near a settlement with J.P. Morgan Chase JPM -0.09% & Co., is focusing on a giant trading position that enforcement officials believe distorted prices and misled investors, according to people familiar with the matter.
The CFTC is focusing on the bank's increasingly aggressive trades made over several months early last year, when it added tens of billions of dollars to its derivatives positions—contracts tied to investment-grade corporate bonds, these people say. The agency is continuing its investigation as four other regulators prepare to settle with J.P. Morgan this week and levy at least $800 million in penalties, according to people familiar with the settlement talks.
The CFTC is likely to use new powers granted by the Dodd-Frank law that allow it to charge firms for recklessly manipulating markets, say people familiar with the agency's thinking. Previously, the agency had to prove that traders intended to manipulate prices in order to win a case. 

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