The US Treasury Department has launched an investigation into JPMorgan Chase over its dealings with a hedge fund allegedly tied to Iranian oil trader Hossein Shamkhani, raising questions about compliance with financial regulations, according to a report by Bloomberg.
The probe, which is still in its early stages, focuses on whether JPMorgan adhered to all applicable rules when it accepted Ocean Leonid Investments as a client. The report cites unnamed sources familiar with the matter as revealing that the hedge fund, which operates from offices in London, Dubai, and Geneva, and was recently suspended by Dubai’s financial free zone, is reportedly part of a network linked to Shamkhani.
Ocean Leonid’s alleged ties to the Iranian were first revealed in a Bloomberg report on 24 October, which also noted that JPMorgan, ABN Amro Bank NV, and Marex Group had provided leverage to the firm.
Spokespeople for JPMorgan, the US Treasury, and Ocean Leonid have declined to comment, while Shamkhani did not respond to a request for comment through his lawyer.
In a previous statement, an Ocean Leonid representative denied allegations of Shamkhani’s involvement, asserting that the hedge fund categorically rejects any claims of his oversight. Shamkhani’s lawyer similarly denied any relationship between his client and Ocean Leonid.
Currently, there is no obligation for JPMorgan to terminate its relationship with Ocean Leonid, as neither Shamkhani nor the hedge fund appears on any US sanctions lists. However, the Treasury is keenly interested in Shamkhani’s activities and is exploring the potential for compliance lapses by the bank, according to sources.
The Federal Reserve is also examining Western financial institutions’ exposure to Shamkhani’s network, although a Fed spokesperson declined to comment.
Shamkhani’s father, Ali Shamkhani, a key adviser to Iranian Supreme Leader Ayatollah Ali Khamenei, was sanctioned by the US in January 2020. The sanctions cited his prominent role in shaping Iran’s defence policies and coordinating intelligence and economic activities in alignment with the Supreme Leader’s directives.
