August 21, 2012 / 4:17 PM / 6 years ago

Another risk officer in JPMorgan 'Whale' trade retains lawyer

* 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 at least $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 familiar with the investigations.

Federal authorities are investigating an allegation that some of the bank’s traders in London may have tried to hide hefty losses, and JPMorgan is conducting an internal probe.

Peter Weiland, who was head of risk at JPMorgan’s Chief Investment Office from late 2008 until the beginning of 2012, is one of at least six people associated with the case who have hired attorneys. He has been reassigned by the bank to a new risk control team at the overhauled Chief Investment Office where the loss occurred.

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

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

It is not clear how much interest federal authorities have in Weiland over an incident that has proved to be a major embarrassment for JPMorgan CEO Jamie Dimon. There is no indication that authorities believe Weiland has done anything wrong.

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

So far, the investigation by the federal prosecutors and the Federal Bureau of Investigation is mainly focusing on the activities of the three former traders most directly responsible for incurring the losses, according to people familiar with the investigation. The Securities and Exchange Commission’s New York regional office also is investigating.

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

JPMorgan’s internal probe involves two outside law firms and more than 100 lawyers conducting interviews and reviewing thousands of emails and internal communications.

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

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