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US Senate investigates JPMorgan over $5.8bn losses

US Senate is conducting a probe against the functioning of JPMorgan in the wake of $5.8bn trading loses, which slashed the investors’ confidence.

A permanent subcommittee on investigations had sent writ to regulators to find out whether vital inputs about the bank’s activities were provided by the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Reserve Bank of New York and the Federal Deposit Insurance Corp, reported the Financial Times.

A JPMorgan spokesman told the news agency, "As always we’re co-operating with all regulatory and governmental inquiries around the CIO matter."

The Senate’s investigative wing is managed by Carl Levin, the Democratic senator, which was also accountable for a investigation of Goldman Sachs in 2010, over the bank’s role in structuring collateralized debt obligations.

JP Morgan revealed that it has suffered nearly $2bn trading loss due to a failed hedging strategy on synthetic credit securities.

The losses have been blamed due to trades undertaken by the firm’s chief investment office (CIO), managed by Ina Drew, who is in charge of a London-based trader dubbed the "London Whale".

The biggest US bank by assets in a Securities and Exchange Commission filing, reported that its CIO had significant mark-to-market losses in its synthetic credit portfolio since the end of March 2012.