JPMorgan Chase & Co. was accused by Siena prosecutors of obstructing the regulators' investigation into Banca Monte dei Paschi di Siena SpA's acquisition of Banca Antonveneta SpA.
The prosecutors claimed that an unidentified person working at JPMorgan Securities Ltd, a subsidiary of the New York-based bank, withheld information from regulators who conducted the probe. The widened probe was about a Eur1 billion financial aid for Monte Paschi's supposed takeover deal for Antonveneta in 2008. This was according to a July 30 court filing taken by Bloomberg News. According to the same filing, the bank failed to oversee its workers properly which resulted to allegations filed against it.
To finance the deal, JPMorgan made an arrangement to sell bonds that were exchangeable to shares of Monte Paschi. JPMorgan benefited by earning commissions from the alleged crime. The lender failed to inform the Bank of Italy that it signed security agreement with Monte Paschi. The indemnity agreement stipulates protection for JPMorgan from possible losses which are linked to the securities, said Siena prosecutors. As the agreement was not shown, Monte Paschi counted the fundings as equity instead of a boost in capital and debt.
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