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JPMorgan Chase & Co. is under scrutiny by the Office of the Comptroller of the Currency (OCC), a U.S. regulator, for the bank’s due diligence on several past acquisitions, the Financial Times reported, citing people familiar with the matter.
According to the report, the regulator scheduled a specific audit of JPMorgan’s deal making after the lender acquired dozens of smaller companies in 2021 and 2022.
The move comes after the U.S. government filed criminal charges accusing the founder of college financial aid company Frank, Charlie Javice of financial fraud. The company was one of the lender’s acquisitions during the above mentioned period.
Javice is accused of “falsely and dramatically” inflating the number of customers Frank actually had in a scheme to “fraudulently induce” the bank to acquire the startup in 2021, federal prosecutors in Manhattan said. They added that she benefitted to the tune of over $45 million from the alleged deception.
The now-shuttered startup Frank led the JPMorgan to believe it had around 4.25 million customers while the company had data of 300,000 students. The lender was allegedly defrauded for $175 million.
CEO JPMorgan Jamie Dimon called the acquisition a “huge mistake” in a January conference call with analysts.
JPMorgan also sued Javice and Olivier Amar, Frank’s former chief growth officer, in Delaware federal court in December. The OCC audit was undertaken before JPMorgan’s lawsuit.
Javice also filed counterclaims in February, accusing the lender of “compromising her reputation” and wrongfully withholding $28 million of retention payments and equity.
JPMorgan Chase declined to comment on the report.
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