The U.S. Treasury Department’s inspector general has threatened to punish JPMorgan Chase & Co. for failing to turn over documents to regulators investigating the bank’s ties to Bernard Madoff’s Ponzi scheme.

Inspector General Eric Thorson gave the largest U.S. bank a Jan. 11 deadline to cooperate with the Office of the Comptroller of the Currency probe or risk sanctions for impeding the agency’s oversight. JPMorgan, according to the Dec. 21 letter, contends the information is protected by attorney-client privilege.

Thorson’s letter didn’t spell out what documents the OCC is seeking or the focus of its investigation. Madoff is serving a 150-year sentence after confessing to the fraud that once claimed to have $65 billion in customer assets.

The previously undisclosed OCC probe adds to the lender’s troubles in Washington, where several agencies and lawmakers are investigating the bank’s loss of at least $6.2 billion on botched derivatives trades. The losses have prompted regulators including the Federal Reserve to consider tightening proposed restrictions on proprietary trading.

Jennifer Zuccarelli, a JPMorgan spokeswoman, said the bank “will of course continue to work together with our regulators” on the investigation.

Confidential Guidance

“This dispute does not go to the merits of the matter but it does raise an important issue of principle: Whether we and other banks, large and small alike, have the fundamental right long recognized in this country to communicate freely with and seek confidential guidance from their lawyers,” Zuccarelli said in an interview.

Bryan Hubbard, an OCC spokesman, declined to comment on the agency’s inquiry.

In the letter sent to JPMorgan general counsel Stephen Cutler, the inspector general -- the Treasury’s internal watchdog -- dismissed JPMorgan’s arguments on attorney-client privilege, saying the OCC “could not do its work” if banks were allowed to withhold information on that basis. The OCC, an independent bureau of Treasury, asked the IG office to review the situation, Thorson said in the letter.

Failure to produce the records “will have to be seen as a continuing purposeful impediment to the authority of the OCC,” Thorson said in the letter, and would require “further action by our office.”