Another risk officer in JPMorgan 'Whale' trade retains lawyer

Aug 21, 2012, 12:15 PM EDT

* At least six individuals have hired lawyers in probe

* Weiland has been reassigned to new risk control team

By Emily Flitter and David Henry

NEW YORK, Aug 21 (Reuters) - Another JPMorgan Chase & Co risk manager, who worked for a division that lost atleast $5.8 billion on a series of complex derivatives trades,has hired a lawyer in connection with probes into the so-called"London Whale" trading debacle, according to sources familiarwith the investigations.

Federal authorities are investigating an allegation thatsome of the bank's traders in London may have tried to hidehefty losses, and JPMorgan is conducting an internal probe.

Peter Weiland, who was head of risk at JPMorgan's ChiefInvestment Office from late 2008 until the beginning of 2012, isone of at least six people associated with the case who havehired attorneys. He has been reassigned by the bank to a newrisk control team at the overhauled Chief Investment Officewhere the loss occurred.

Weiland, who is based in New York, did not return requestsfor comment, and his lawyer declined to comment.

Of the six people who have hired attorneys, all but Weilandhave either been fired by the bank or left on their own accord.

It is not clear how much interest federal authorities havein Weiland over an incident that has proved to be a majorembarrassment for JPMorgan CEO Jamie Dimon. There is noindication that authorities believe Weiland has done anythingwrong.

It is not unusual for traders to retain counsel in suchhigh-profile probes, in part to shield themselves when criticaldiscussions occur about possible criminal or civil wrongdoing.

So far, the investigation by the federal prosecutors and theFederal Bureau of Investigation is mainly focusing on theactivities of the three former traders most directly responsiblefor incurring the losses, according to people familiar with theinvestigation. The Securities and Exchange Commission's New Yorkregional office also is investigating.

In January the Chief Investment Office changed its key riskmodel in a way that made the amount of risk piling up in thegroup's portfolio look smaller. JPMorgan in July said that themodel introduced in January, which has since been cast aside,was implemented erroneously.

JPMorgan's internal probe involves two outside law firms andmore than 100 lawyers conducting interviews and reviewingthousands of emails and internal communications.

The criminal probe by U.S. authorities, which began shortlyafter JPMorgan disclosed in May that it may have lost at least$2 billion on the derivatives bets, took on more urgency afterthe bank notified U.S. authorities on July 12 that it had foundevidence the London traders may have used improper valuations inan attempt to hide the severity of the losses.

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