Did JPMorgan Chase's Jamie Dimon violate Sarbanes-Oxley?

[PA Democrat]

The Sarbanes-Oxley Act of 2002, section 302, “Corporate Responsibility for Financial Reports,” requires the CEO and CFO of publicly traded companies to certify the appropriateness of their financial statements and disclosures and to certify that they fairly present, in all material respects, the operations and financial condition of the company.

It appears that JPMorgan Chase changed its accounting methods to deliberately HIDE the company's potential exposure on credit derivatives right around the time it became apparent that bank could be facing huge losses.

An important avenue for the S.E.C. investigation, people briefed on the matter said, is the firm’s accounting methods relating to the trades. Investigators could take a close look at how the bank reported risk for the chief investment office and whether changes it made to that measure were adequately disclosed.

In the first quarter, JPMorgan changed its risk measurement to one it felt was more in line with recent regulatory changes involving capital requirements. Yet the bank had issues with the model, and Mr. Dimon said on Thursday that it was later deemed “inadequate.”

JPMorgan, said a person briefed on the matter but not authorized to speak on the record, did not need regulatory approval to change its risk model, but eventually would have to. Other firms said they tended to work in concert with regulators when altering this model.

The change clearly masked the risk of the trades now under the microscope. Mr. Dimon disclosed that the daily value at risk for the trading unit had almost doubled, from an average of $67 million for the first quarter, to $129 million, after the bank scrapped the new model and revised the figures.

http://dealbook.nytimes.com/2012/05/11/in-jpmorgan-chase-trading-bet-its-confidence-yields-to-loss/