Ex-Chase Trader Named in Stock-Loan Scam

As if J.P. Morgan Chase doesn't have enough on its plate with the effort to bail out Bear Stearns, its name surfaced today in a federal securities enforcement action against one of its former stock loan traders.

J.P. Morgan isn't accused of any wrongdoing but the Securities and Exchange Commission accused a former employee, trader Robert Durant, 42, of Milford, Connecticut, with misappropriating most of Chase's profit from a series of stock loan transactions.

Chase employed Durant from1994 through July 2003; the alleged malfeasance occurred at the end of his tenure, and involved Italian securities.

The scheme netted $1.2 million for Durant and five other defendants whom the S.E.C. also named in its civil action filed in federal court in Brooklyn.

The commission says they defendants were involved in a scheme where finders' fees were paid out of the interest payments that Dresdner Kleinwort Wasserstein Securities L.L.C. owed Chase.

From May 2003 through June 2003, the scheme resulted in Dresdner paying stock finder Bearcat Financial Services of New Port Richey, Florida, the money. Durant and three other defendants stashed the cash in offshore and other accounts, according to the complaint.

However, neither Bearcat nor another named firm, Tyde Inc. of New York, performed any finding services for these loan transactions, according to the S.E.C.

The commission is seeking civil penalties and disgorgement of the funds from Durant; Robert Johnson, of Somers, New York; Lori Caporicci, of Staten Island, New York; James Bennett, of New Port Richey, Florida; along with Bearcat and Tyde.

J.P. Morgan Chase declined to comment on the matter.

by Elizabeth Olson