DealBook: Loopholes Abound Despite New Rules

(Adds other probe details starting in eighth paragraph.)

* Investment bank bet against CIO in derivatives market * Bank said to have discussed merging opposing trade books * Opposing bets could fuel claim JPM is too big to manage

NEW YORK (Reuters) - The former JPMorgan Chase & Cotrader known as the "London Whale" was not responsible for Lehman Brothers Holdings Inc's bankruptcy and should not be dragged into an $8.6 billion lawsuit accusing the largest U.S. bank of causing it, JPMorgan said.

By Paulo Santos:Bruno Iksil's actions that led to yesterday's JPMorgan (JPM) announcement of surprise losses in its CIO (Chief Investment Office) division are familiar.

A bunch of current and former JPMorgan Chase executives will head to Capital Hill this morning for a senate hearing on the "London Whale" trade that caused the bank to lose billions last year. 

LONDON, Jan 16 (Reuters) - JPMorgan Chase & Co has reached an out-of-court settlement over its lawsuit against the former boss of Bruno Iksil, the trader known as the "London Whale" for huge bets he took that cost the bank $6.2 billion, a person familiar with the matter said. Javier Martin-Artajo, who was Iksil's immediate supervisor, had been named as a defendant in a lawsuit filed at London's High Court on Oct. 22.