J.P. Morgan Is Notified by SEC of Possible ActionApr 15, 2003 | Wall Street Journal
J.P. Morgan Chase & Co. has received notice of the likelihood of legal action from the Securities and Exchange Commission, a person familiar with the matter told The Wall Street Journal.
The person said the latest dispute to surface between J.P. Morgan and regulators concerns the bank's alleged role in assisting Enron Corp. in schemes that allowed the failed energy trader to hide debt.
The person said the bank has received a so-called Wells notice from the SEC, often a sign of looming legal action. A number of other Wall Street firms, including Merrill Lynch & Co. and Citigroup Inc. have also come under regulatory scrutiny in recent months for their roles in helping Enron conceal debt. Merrill recently settled an Enron-related SEC dispute for $80 million.
J.P. Morgan and its Wall Street rivals have sparked a slew of investigations into the role of the nation's financial institutions in the dangerous financial high jinks that caused the Dec. 2, 2001, failure of Houston-based Enron. J.P. Morgan, as reported in January, is also facing the scrutiny of the Manhattan- based U.S. District Attorney Robert Morgenthau, who has convened a grand jury to investigate the role of key bankers involved in J.P. Morgan's relationship with Enron.
The investigations have focused on a series of transactions named after paper companies, set up offshore by J.P. Morgan, with names that include Mahonia.