Check Out ProPublica's Detailing Of The "Magnetar Trade" (JPM)

Shares of J.P. Morgan (NYSE: JPM) moved lower on Monday after reports that the bank is being investigated by the SEC for engaging in conduct similar to that of Goldman Sachs (NYSE: GS) in the ABACUS CDO deal. Goldman (GS) paid a $500 million fine after the SEC accused the firm of not disclosing to investors in the deal that hedge fund Paulson & Co. had a role in selecting the mortgages that went into the CDO and was betting against the deal.

The new allegations against J.P. Morgan (JPM) suggest that the firm may have engaged in similar conduct in its relationship with Chicago based hedge fund Magnetar. ProPublica has an excellent piece on the "Magnetar Trade" as it is now known, which details the events surrounding the transactions which are now under scrutiny. Read about it here.