The Commodity Futures Trading Commission said on Wednesday that JPMorgan Chase & Co will pay $20 million to settle charges that it unlawfully handled customer segregated funds at Lehman Brothers Holdings Inc.

The action comes as the CFTC and other regulators continue to probe what happened to segregated customer funds in the October 2011 collapse of MF Global Holdings Ltd , a commodity trading firm that also did business with JPMorgan.

In the Lehman case, the CFTC said that for about 22 months, ending with Lehman's bankruptcy in September 2008, JPMorgan had improperly extended intra-day credit to Lehman Brothers based in part on customers' segregated funds Lehman had deposited at the bank.

JPMorgan also violated rules by refusing to release customers' segregated funds for nearly two weeks after the bankruptcy, the CFTC said.

In a statement, JPMorgan said it mistakenly factored the balance in the account into a daily calculation of (Lehman) assets to determine the amount of credit the firm was willing to extend to (Lehman).

JPMorgan went on to say that no customer funds were ever used to satisfy any (Lehman) debt to JPMorgan, nor were any funds in these accounts lost.

Lehman spokeswoman Kimberly Macleod declined to comment.

The issue of how JPMorgan handled customer funds of another brokerage also emerged in the ongoing investigation into MF Global. JP Morgan played an important role in MF Global's final hours, as the firm struggled to meet its trading commitments amid a growing customer unease over the brokerage's big bets on European sovereign debt.

When MF Global filed for bankruptcy in October, regulators said its customer accounts were short nearly $1.6 billion. Customer funds are legally required to be held separate from the firm's own cash.

The CFTC is under pressure to add safeguards to customer accounts as thousands of MF Global customers, including many farmers who use futures to hedge risks, try to recover their lost money.

An array of federal regulators are investigating the disappearance, and JPMorgan recently came under scrutiny from congressional investigators over a $175 million transfer that MF Global made to cover an overdraft at JPMorgan just days before the firm's collapse.

That money, congressional investigators said, appeared to come from an MF Global customer-segregated account.

JPMorgan asked MF Global to sign a letter certifying that the transfer was proper, but MF Global never signed it. JPMorgan hasn't been accused of any wrongdoing in this case.

MF Global and its employees have also not been formally accused of wrongdoing.

Some of MF Global's former clients who lost money in the firm's collapse have been angry at JPMorgan over its role in the firm's final days.

Speaking about the fine in the Lehman case, James Koutoulas, who represents many those former MF Global customers, said in an e-mail, it's yet another data point in JPMorgan's systematic disregard for the law and for the safety of client assets. Koutoulas heads the Commodity Customer Coalition, a group of former MF Global customers who lost money in the collapse of MF Global.

Koutoulas also complained about the size of the fine. $20 million will not deter JPMorgan from continuing the conduct in the slightest, he said. U.S. regulators need to drastically increase their fines.

JPMorgan said that it cooperated with the regulators and that the latest settlement doesn't say it intentionally violated the Commodity Exchange Act or CFTC regulations. JPMorgan has consistently denied acting inappropriately in the MF Global case.

The CFTC's order requires JPMorgan to implement reforms to ensure the proper handling of customer segregated funds in the future and to release customer funds upon notice and instruction from the CFTC.

JPMorgan had 2011 net income of $19 billion and recorded $4.9 billion in litigation expenses.

(Reporting by Philip Shishkin and Karey Wutkowski in Washington and David Henry in New York.; Editing by Maureen Bavdek and Gerald E. McCormick, M.D. Golan and Carol Bishopric)

Jpmorgan chase Lehman brothers