JP Morgan confirms it's under federal investigation

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JPMorgan Chase has said it’s under federal criminal investigation for practices tied to sales of mortgage-backed bonds that the Justice Department has already concluded broke civil laws.

Bloomberg reports that the department’s civil division told the bank in May of its preliminary finding after examining securities tied to subprime and Alt-A loans, which were sold to investors from 2005 through 2007, JPMorgan said Wednesday.

The office of U.S. Attorney Benjamin Wagner in Sacramento,California, has been conducting civil and criminal inquiries, the bank said.

'It would be a major decision for them to indict a major U.S. bank, and frankly I would not predict it', said John Coffee, a professor at Columbia Law School in New York. 'You can often bring dual investigations, civil and criminal, in order to maximize pressure for a global civil resolution'.

'Whether they are waking up belatedly to the public’s need for retribution or looking at the expiration of the statute of limitations, they are reaching similar decisions about Bank of America and JPMorgan', Coffee said in an interview.

The U.S. is investigating JPMorgan under the Financial Institutions Reform, Recovery and Enforcement Act, according to a person briefed on the matter, requesting anonymity because details of the inquiry aren’t public.

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