CFTC set for battle with JP Morgan

The Commodity Futures Trading Commission isn’t letting the “London Whale” slip away.

The regulator is at loggerheads in its settlement negotiations with JPMorgan Chase and is prepared to haul the bank to court over the monstrous wrong-way bet, according to sources.

Last month, JPMorgan disclosed that it had received a so-called Wells notice, which informed the financial giant that the CFTC intends to recommend enforcement action against the bank in connection with the Whale trade.

While such a notice is usually a prerequisite to settlement negotiations, it appears to have set the stage for a clash between the banking giant and the newly emboldened regulator.

Already JPMorgan has agreed to pay nearly $1 billion to a trio of regulators, including the Securities and Exchange Commission and the Office of the Comptroller of the Currency, to resolve probes into its handling of the disastrous $6.2 million hole derivatives.

But the CFTC — armed with new powers under the Dodd-Frank financial reform act — opted not to be a party to that settlement in order to pursue its own case against the bank.

The commission is trying to prove that JPMorgan traders manipulated the derivatives market and acted recklessly when they engineered the complicated bet in 2012.