WASHINGTON - US Commodity Futures Trading Commission (CFTC) Wednesday filed charges against JPMorgan Chase Bank for its unlawful handling of Lehman Brothers Inc' customer segregated funds.
The CFTC alleged that JPMorgan extended intra-day credit by using an inaccurate evaluation of Lehman's worth, improperly counting its customer money as belonging to the firm during the period from November 2006 to September 2008. Under federal law, firms are not allowed to use customer money to secure or extend credit.
During that period, Lehman deposited its customers' segregated funds with JPMorgan in large amounts of more than 250 million US dollars at any one time.
The regulator also accused JPMorgan of withholding Lehman's customer segregated funds for nearly two weeks after the company filed for bankruptcy on September 15, 2008, instead of turning them over to authorities.
JPMorgan has agreed to pay a penalty of 20 million dollars to settle the charges. The agency also required JPMorgan to implement undertakings to ensure the proper handling of customer segregated funds in the future and to release customer funds upon notice and instruction from the regulatory authority.
JPMorgan was at the center of the 2008 financial crisis as it was a major lender to Lehman, whose bankruptcy was the biggest one in the history of the United States.