JPMorgan's dealmaking frenzy is under scrutiny by US regulators

There are concerns among US regulators that JPMorgan Chase & Co (JPM.N)'s (JPM.N) due diligence on several of its past acquisitions is being scrutinized by the bank's compliance department, citing people familiar with the matter.

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After JPMorgan bought dozens of smaller companies in 2021 and 2022, the Office of the Comptroller of the Currency (OCC) in the U.S. scheduled a specific audit of the bank's deal-making practices, according to the report.

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In this case, a federal prosecutor filed criminal charges accusing Charlie Javice, the founder of Frank, which has since closed its doors, of defrauding JPMorgan Chase into buying the company for $175 million in 2021 when he was a junior executive at Frank.

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Javice, 31, is facing charges by the Department of Justice for allegedly lying repeatedly to the largest U.S. bank when she claimed Frank lined up 4.25 million student clients, but actually only had data on about 300,000 of them.

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In December, JPMorgan filed an action in Delaware federal court against Javice and Olivier Amar, who was Frank's chief growth officer at the time.

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JPMorgan's lawsuit against the OCC was scheduled before the OCC audit took place, according to the report.

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The counterclaims were filed by Javice in February, alleging that JPMorgan "compromised her reputation" and wrongfully withheld $28 million of retention payments and equity from her.

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Frank was shut down by the bank in January, and Chief Executive Jamie Dimon branded the acquisition in a conference call with analysts on Jan. 13 as a "huge mistake".

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Trade Algo reached out to JPMorgan for comment on the report as well as the OCC for comment, but neither of them responded immediately.