SEC Opens Investigation Into JPMorgan’s $2 Billion Loss

Regulators are investigating potential civil violations surrounding the $2 billion loss that JPMorgan Chase disclosed on Thursday, raising further questions about the trading activities at the nation’s biggest bank.

The U.S. Securities and Exchange Commission seal hangs on the facade of its building in Washington, DC.

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The Securities and Exchange Commission recently opened a preliminary investigation into JPMorgan’s accounting practices and public disclosures about the trades, according to people briefed on the matter, who spoke on the condition of anonymity because the case is not public. Regulators learned about the activities in April, and formally opened an investigation in recent days, the people said.

The case, which is being run out of New York, will likely examine the bank’s past regulatory filings about the internal unit that placed the trades — as well as recent statements from the firm’s top executives.

In April, questions surfaced about the group, the so-called chief investment office, after reports emerged that a London-based trader was taking large bets that distorted the market. At the time, Jamie Dimon, the bank’s chief executive, dismissed the concerns about the trading activities, calling them a “complete tempest in a teapot.”

On Thursday, JPMorgan revealed that the group had suffered , which could cost the firm $2 billion or more. A more humble Mr. Dimon on Thursday said “egregious mistakes” were made.

An important avenue for the S.E.C. investigation, the people said, is the firm’s accounting methods relating to the trades. Investigators could take a close look at a measure known as value-at-risk. The company disclosed earlier this year that it changed the way it calculates the metric, which may have masked some of the risk surrounding this trade. On a conference call Thursday, Mr. Dimon said the firm had reverted to the old way of calculation value-at-risk.

The people cautioned that the investigation is at an early stage. No one at JPMorgan has been accused of any wrongdoing. JPMorgan was not immediately available for comment. A spokesman for the S.E.C. declined to comment.