In letters to the banks' CEOs, Sen. Elizabeth Warren of Massachusetts and Rep. Katie Porter of California said JPMorgan and Goldman are taking advantage of the conflict in Ukraine by trading in and pitching clients on already-issued Russian bonds that plunged in price amid fallout from the war.
The lawmakers noted that this kind of secondary-market trading isn't prohibited, provided no sanctioned parties or new government debt issuances are involved. But it may help "undermine U.S. sanctions and fund Russia's human rights abuses in Ukraine," according to the lawmakers.
"We are seeking information on how your dealings could benefit Putin's regime and how your institution may be profiting off of Russia's invasion of Ukraine," Warren and Porter wrote, referring to Russian President Vladimir Putin.
The letters ask that JPMorgan and Goldman disclose what kinds of Russian debt trades and investments they have handled since the Russian invasion in February, who their clients have been and how much they have made in profit, among other data points.
The letters also ask the banks about their sanctions compliance policies, their reporting to sanctions authorities and whether they have helped publicity-shy clients stay anonymous when transacting.
This information, which is requested by May 24, is sought so the lawmakers can "ensure that your company's actions are not prolonging this inhumane attack and undermining U.S. interests abroad," the letters told the banks' CEOs, Jamie Dimon of JPMorgan and David Solomon of Goldman.
A JPMorgan spokesperson declined to comment on the letters but referred Law360 to a statement originally issued by the bank last month.
"As a market-maker, we have been helping clients reduce their risks and manage their exposures to Russia in the secondary markets. None of the trades violate sanctions or benefit Russia," the statement said.
A Goldman spokesperson declined to comment.
The Russian attack on Ukraine led the U.S. and other Western governments to impose crippling sanctions on Russia, battering its economy and cutting off its access to major financial markets. The invasion also sparked a furious corporate backlash, with JPMorgan and Goldman among the many international firms that announced plans to exit the country.
But in their letters, Warren and Porter cited recent news reports highlighting the brisk business that major banks are doing in brokering deals for heavily discounted Russian government and corporate debt, which has attracted interest from hedge funds and other investors speculating on recovery.
"JPMorgan and Goldman Sachs, both of which won plaudits for winding down their operations in Russia, have engaged in the sales and trades of Russian debt on the secondary market, pouncing on Russia's cheap corporate debt to profit off of the war," the lawmakers wrote.
Warren has previously criticized JPMorgan and Goldman for dealing in Russian debt, saying in March that the two banking giants "never miss out on an opportunity to get richer even if it means capitalizing on Russia's invasion of Ukraine."
The comments followed reporting from Bloomberg that said JPMorgan and Goldman were buying up distressed Russia-linked corporate bonds for clients or for anticipated resale. Strategists at JPMorgan were also recommending clients increase their positions in certain Russian industrials' bonds, according to the reporting.
Other major banks have also taken heat for purported Russia-related business dealings. Late last month, Credit Suisse was sued in New York federal court over claims that it misled investors about an alleged practice of lending to Russian oligarchs and a late 2021 securitization deal allegedly involving such loans.
--Editing by Jill Coffey.
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