U.S. looks into JPMorgan’s ties to Iranian-linked hedge fund – report

The U.S. Treasury Department is investigating JPMorgan Chase’s (NYSE:JPM) relationship with a hedge fund that”s suspected to be part of a network controlled by Hossein Shamkhani, an Iranian oil trader, according to a media report.

The investigation, in an early stage, is looking at whether JPMorgan (NYSE:JPM) followed all the rules and regulations when it took on Ocean Leonid Investments Ltd. as a client, Bloomberg News reported on Friday, citing people familiar with the matter. The fund was recently suspended by Dubai’s financial free zone.

In October, Bloomberg News reported on Ocean Leonid’s role as a hedge fund with offices in Dubai, London, and Geneva that’s overseen by Shamkhani.

There’s no requirement for JPMorgan (JPM) to drop the client because neither the firm nor Shamkhani are on any sanctions list. Primarily, the U.S. Treasury is focused on Shamkhani’s activities; however, the potential of bank compliance shortfalls is also a consideration, the people told Bloomberg News.

Spokespeople for JPMorgan (JPM), the U.S. Treasury, and Ocean Leonid didn’t respond to Bloomberg’s request for comment.

Previously, an Ocean Leonid representative had told Bloomberg News the company rejects the allegation that Shamkhani is involved in the entity.

The people also told Bloomberg that the Federal Reserve is also looking into Western financial exposure to Shamkhani’s network.

JPMorgan Chase (JPM) stock edged down 0.2% in Friday premarket trading.