J.P. Morgan Chase Suspected of Facilitating Late Trades

Regulators are turning their attention toward J.P. Morgan Chase for its role in facilitating improper trades by Canary Capital Partners, the New York-based hedge fund that touched off the far-reaching late-trading and market-timing mutual fund scandals, The Wall Street Journal reports.
The Securities and Exchange Commission, which sanctioned Canary late last year, is now questioning whether J.P. Morgan met its obligations to police its client's activities after extending up to $150 million in credit to the hedge fund.
Officials from J.P. Morgan's legal defense team at Davis Polk & Wardwell noted in an internal memo that their clients were oblivious to Canary's misconduct, but SEC officials are building a case stating ignorance is no defense.
The bank was initially charged in September for playing a role in Canary's improper trading of PBHG Funds, Invesco Funds Group and Massachusetts Financial Services by a group of shareholders who filed a lawsuit in a Baltimore Federal court.

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