Not so long ago JPMorgan was in the news for the now infamous London Whale trade or as the internet dubbed it Fail Whale. The trade involved JPMorgan’s London office when a trader, Bruno Iksil, lost approximately $6 billion due to failing to manage risk in the derivatives market. The trade became a political issue as JPMorgan is a Too Big To Fail bank backstopped by the US government. Hearings were held and JPMorgan’s CEO, Jamie Dimon, publicly admitted to mistakes and some of the JPM executives involved were fired.

Now the Commodities Future Trading Commission (CFTC) wants JPMorgan to admit to market manipulation after investigating the bank.

The CFTC is focusing on the bank’s increasingly aggressive trades made over several months early last year, when it added tens of billions of dollars to its derivatives positions—contracts tied to investment-grade corporate bonds, these people say. The agency is continuing its investigation as four other regulators prepare to settle with J.P. Morgan this week and levy at least $800 million in penalties, according to people familiar with the settlement talks.

The CFTC is likely to use new powers granted by the Dodd-Frank law that allow it to charge firms for recklessly manipulating markets, say people familiar with the agency’s thinking. Previously, the agency had to prove that traders intended to manipulate prices in order to win a case.

It is going to be pretty difficult for JPMorgan to argue against recklessness. Even if you accept the trade was not intended to manipulate the market it was certainly reckless.

JPMorgan, not surprisingly, is not only reckless but shameless and is refusing to admit fault in one of the biggest screw ups in the firm’s history.

One of the sticking points in the CFTC discussions is over whether the bank or its traders manipulated the trades, according to a person familiar with the talks. J.P. Morgan is balking at any CFTC settlement that would require it to admit to manipulation, this person said…

In its report, the Senate panel, led by Carl Levin (D., Mich.), said J.P. Morgan’s investment office traded so heavily in the contracts at times that “it drove down the overall…market price, which caused the CIO’s earlier acquisitions to continue to gain in value.”

The entire trade which Iksil is quoted as describing as “monstrous” was intended to manipulate the market. And with Jamie Dimon first failing to inform regulators then telling regulators he would not follow regulations it seems pretty clear JPMorgan needs to be sent a message on following the rules.

We will have to see if the CFTC sticks to its guns or JPMorgan once against gets a pass on its predatory and parasitic activity. The London Whale trade comes after the passage of DoddFrank so maybe it is not enough to merely rewrite the laws – perhaps the laws have to be vigorously enforced to have any impact.